Near $50.50: Silver Price Forecast as XAG/USD Gains Despite Fed Rate Hike Bets

Hot US CPI figures fuel bets on a December Fed rate increase, potentially weighing on Silver.
6.6% YoY is the headline forecast for US October PPI. Traders await Friday’s release for fresh inflation signals.
Hopes of an Iran agreement faded after President Trump said on Truth Social that the days for a deal had long passed.

Silver price (XAG/USD) trades near $50.50 per troy ounce in Friday’s Asian session. The metal is recovering from the previous day’s modest decline. Further gains may prove difficult, however, as Treasury yields rise on expectations of a more aggressive Federal Reserve (Fed) policy stance.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

10-Year US Treasury Yield: Rabobank Breaks Down 2026 Changes

A breakdown of the 10-year US Treasury yield underpins Rabobank’s structured assessment of long-term yield dynamics and the forces driving this year’s changes. Describing their latest US rates research, the bank’s analysts highlight “a detailed decomposition of the 10yr UST yield and how it has changed in 2026,”

Nearly 85.5% odds of a Fed rate increase at the central bank’s next meeting on 8–9 December are now priced in by traders, according to the CME FedWatch tool. The probability of a half-point increase stands at 14.5%. Expectations for a December hike strengthened after US Consumer Price Index (CPI) inflation figures exceeded forecasts earlier this week. Fed Governor Christopher Waller said a 50-basis-point increase should be considered if core inflation stays elevated.

Friday’s US Producer Price Index (PPI) release will provide the next focus for inflation signals and the Fed’s interest rate decision. Forecasts put October headline PPI growth at 6.6% YoY, with core PPI expected to increase 5.0% YoY over the same reporting period.

Separately, CNBC reported that US President Donald Trump said on Thursday that the US should stop pursuing an agreement with Iran. In a Truth Social post, Trump wrote: “We don’t need a deal with Iran. Those days have long since passed,”

Silver: Key Questions

Silver Investment: What Attracts Investors?

Investors trade Silver extensively as a precious metal with a long history as both a store of value and a means of exchange. Gold remains more popular, but Silver can attract traders seeking portfolio diversification, intrinsic value or a potential hedge against high inflation. Exposure can take the form of physical coins and bars. Alternatively, investors can use instruments such as exchange-traded funds that track Silver’s price in international markets.

Silver Prices: The Main Drivers

Several forces can influence Silver prices. Because Silver offers no yield, lower interest rates tend to support it. Its safe-haven role can also lift prices during geopolitical instability or fears of a severe recession, though this effect is weaker than for Gold. Dollar movements matter because Silver is priced in US Dollar (USD) terms (XAG/USD): a stronger Dollar generally restrains prices, while a weaker currency is likely to lift them. Investment demand, recycling rates and mine supply also play a part, with Silver far more abundant than Gold.

Industrial Demand: Its Role in Silver Pricing

Among metals, Silver has one of the highest levels of electrical conductivity, exceeding both Copper and Gold. This makes it widely used in industry, notably electronics and solar energy. Rising demand can push prices higher; falling demand generally has the opposite effect. Economic developments in the US, China and India can also drive price fluctuations. Large industrial sectors in the US, and especially China, consume Silver across multiple processes. In India, consumer demand for Silver jewellery is another important influence on prices.

Gold and Silver: How Prices Move Together

Gold’s price direction often sets the course for Silver, with gains in Gold typically accompanied by a rise in Silver because both metals share safe-haven characteristics. Their relative valuations can be assessed using the Gold/Silver ratio: the number of ounces of Silver equivalent in value to one ounce of Gold. A high ratio may signal to some investors that Silver is undervalued or Gold overvalued. Conversely, a low reading may indicate that Gold is undervalued against Silver.