Silver Price Forecast: Why has XAG/USD slipped below $50 amid turmoil in US bond markets?

• Why is Silver slipping below $50.00 as US bond markets tumble?
• US bond selling has driven 10-year Treasury yields to nearly 5.13%, a jump of almost 5.5% over the last two trading days.
• A December interest rate hike by the Fed is a certainty, according to the CME FedWatch tool.

Selling pressure returns to Silver (XAG/USD) in Friday’s European trading session, erasing modest early gains and taking the price back below $50.00. The white metal’s broader decline resumes against a sharp sell-off in United States (US) bond markets. With inflationary pressures accelerating, market participants anticipate aggressive monetary tightening by the Federal Reserve (Fed) in the near term.

At the time of writing, the 10-year US Treasury yield remains close to its three-week high of $5.13%. Over the past two trading days, yields on 10-year US bonds have risen by almost 5.5%.

In theory, the appeal of non-yielding assets such as Silver weakens when returns on interest-bearing US assets rise.

Why is the US inflation surprise weighing on Treasuries?

The latest US inflation report was the main catalyst for the day’s market movements, according to strategists at Deutsche Bank. They note that “that US CPI print drove the biggest moves of the day, with the monthly core CPI print for October above consensus at +0.30% (vs. +0.2% expected).” Underlining the persistence of price pressures, they say “it was the third consecutive month with core CPI at +0.3%, and if you take those three months together, the annualised pace for core CPI is running at +3.75%.” In Deutsche Bank’s assessment, “that’s the fastest pace on that measure since April 2024, so it made it increasingly difficult to dismiss this as a blip.”

Turning to the headline figures, the bank observes that “meanwhile, the headline CPI numbers were faster still, with monthly headline CPI at +0.35% (vs. +0.3% expected), with the 3-month annualised pace at +5.72%.” Deutsche Bank describes the resulting market response as follows: “for markets, the clearest impact could be seen in US Treasuries, with yields surging across the curve.”

Traders have also increased their hawkish bets on the Fed as US inflation rises. The CME FedWatch tool indicates that an interest rate increase at the December meeting is certain, including a 10% probability of a 50 basis points (bps) hike.

Silver Technical Analysis: Can the Bearish Bias Ease?

A bearish near-term outlook persists on the daily chart, where XAG/USD trades at $49.87, below the 20-period exponential moving average (EMA) of $53.08. Remaining beneath this short-term trend indicator suggests that rallies are still constrained. Meanwhile, the Relative Strength Index (RSI), at 34.76, sits below the neutral 50 mark, pointing to continued downward pressure rather than a decisive recovery from oversold conditions.

For the current bearish tone to ease, Silver would need a sustained move above immediate resistance at the 20-day EMA, around $53.08. Such a break would pave the way for a more constructive recovery. Unless that resistance is regained, momentum readings in the lower mid-30s favour corrective rebounds within a broader declining trend rather than a lasting reversal.

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