Silver Price Forecast: Why is XAG/USD surging towards $53 despite rising US bond yields?

• Silver price surges towards $53, defying the sell-off in US bonds.
• US Treasury yields climb as October US CPI comes in above expectations.
• Elevated US inflation is likely to persist next year as well, according to Commerzbank.

Defying a sharp rise in US Treasury yields, Silver price (XAG/USD) has advanced almost 3% to trade near $53.00 in Wednesday’s European session. The rally in the white metal comes amid intensifying debate over whether the Federal Reserve (Fed) could announce a supersize interest rate hike at its December policy meeting. Fuelling that debate, October Consumer Price Index (CPI) data from the United States (US) exceeded projections, sending Treasury yields sharply higher.

Why is the US inflation surprise weighing on Treasuries?

The latest bond sell-off was primarily triggered by the inflation release, according to strategists at Deutsche Bank, who observe 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).”

Highlighting the persistence of price pressures, Deutsche Bank adds that “moreover, 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%.” The bank notes that “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 broader inflation measure, 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%.” Assessing the market reaction, its strategists say that “for markets, the clearest impact could be seen in US Treasuries, with yields surging across the curve.”

At the time of writing, the yield on 10-year US Treasuries stands around 5%, up 2.4%. Higher returns on US interest-bearing assets typically reduce the relative attraction of non-yielding alternatives such as Silver.

When could US inflation pressures ease?

US price pressures are still uncomfortably high, warn economists at Commerzbank, who note that “prices are still rising too quickly, even though the increase was somewhat smaller than in September.” In their view, progress on underlying inflation has stalled rather than continued, as “core inflation, a key gauge of the underlying trend, thus remains (too) high and is no longer trending downward,” according to the economists. Explaining their outlook, they state that “the strong economy and the ongoing conflict in the Middle East suggest that inflation is unlikely to ease in the near term,” adding that “inflation is not expected to decline until 2027, and even then, it is likely to remain above a level consistent with price stability.”

Silver prices would likely remain under pressure in such a scenario.

Silver Technical Analysis: Can Prices Reclaim the 20-Day EMA?

With XAG/USD trading at $52.94 on the daily chart, the near-term outlook remains bearish as prices sit beneath the 20-day Exponential Moving Average (EMA) of $53.89. Recent efforts to stabilise have yet to overcome this dynamic resistance. At 43.6, the Relative Strength Index (RSI) has moved out of oversold territory but still sits below 50. That reading points to a limited reduction in downward momentum, not a confirmed trend reversal.

A sustained move above the initial resistance at the 20-day EMA of $53.89 would be required to ease the prevailing bearish bias and pave the way for a more substantial recovery. The indicators provided offer no clear nearby structural support levels. As long as prices remain below the EMA, the downside is vulnerable, and renewed selling pressure beneath recent lows could leave XAG/USD facing further losses.

(An AI tool assisted in preparing the technical analysis for this article. Learn more.)