Why is silver climbing above $52 despite rising US yields and Fed rate-hike bets?

• Despite firmer US Treasury yields and a stronger US Dollar, Silver rises 1.60% on Wednesday.
• Expectations of additional Federal Reserve rate hikes strengthen as US inflation exceeds forecasts.
• Persistent inflation may prolong restrictive monetary policy, Deutsche Bank and Commerzbank caution.

Buying interest lifts Silver (XAG/USD) 1.60% on Wednesday to around $52.35 at the time of writing, even as US Treasury yields and the US Dollar (USD) climb. The precious metal's advance comes as an upside surprise in inflation strengthens expectations that the Federal Reserve (Fed) will raise interest rates further.

At 0.4%, the October rise in the US Consumer Price Index (CPI) surpassed the market forecast of 0.3%, though it moderated from September's 0.6% increase. Excluding food and energy prices, core CPI climbed 0.3%, matching the previous month's reading and exceeding expectations of 0.2%.

Investors are consequently anticipating more forceful monetary tightening as the data deepen concerns that inflation remains persistent. Markets have now fully priced in a December Fed rate hike, according to the CME FedWatch tool. The probability of a 25-basis-point (bps) increase stands at 88%, against a 12% chance of a larger 50 bps hike.

The latest core inflation reading meets the threshold previously outlined by Fed Governor Christopher Waller, who indicated that an October figure of 0.3% or above could necessitate a 50 bps increase. On Tuesday, the unexpectedly strong inflation data sparked heavy selling in US government bonds, briefly lifting the benchmark 10-year Treasury yield above 5%.

With core inflation rising 0.3% in each of the past three months, Deutsche Bank analysts note that the three-month annualised rate has reached 3.75%, its quickest pace since April 2024. In the bank's assessment, such persistence makes it harder to treat inflationary pressures as temporary.

Commerzbank economists share those concerns, cautioning that underlying inflation has stopped falling and remains excessively high. Against a backdrop of resilient economic activity and continuing geopolitical tensions in the Middle East, the German bank forecasts persistent inflation throughout 2026, with easing potentially emerging only in 2027.

A second successive day of recovery takes the US Dollar Index (DXY) 0.68% higher on Wednesday. Although rising Treasury yields and a firmer Greenback typically put pressure on non-yielding assets such as Silver, the metal's gains point to sustained buying interest. Expectations of additional Fed tightening could, however, restrain further upside.

Silver technical analysis: Can the metal break above nearby resistance?

Trading at $52.31 on the one-hour chart, XAG/USD remains between two key moving averages: the 200-period simple moving average (SMA) at $51.52 provides support, while the 100-period SMA at $52.37 limits the upside. Consolidation within these boundaries leaves the short-term outlook neutral to slightly weak. At 45.93, the Relative Strength Index (RSI) is marginally below its midline, signalling that upward momentum has weakened following the recent surge towards $53.00. Neither buyers nor sellers currently have a clear advantage.

The first upside barrier is the 100-period SMA at $52.37. Beyond it, horizontal resistance at $53.20 and $53.72 stands in the way of the recent recovery highs. Support initially lies near $51.52 at the 200-period SMA, followed by the horizontal floor of $51.10. A sustained move below these levels would leave the metal vulnerable to a deeper correction; if they hold, XAG/USD would remain range-bound below the nearby moving-average resistance.

(The technical analysis of this story was written with the help of an AI tool. Know more.)