Silver Price Forecast: XAG/USD rises to near $50.50 despite Fed rate hike bets
- Silver may struggle as hot US CPI data drives Fed December rate hike bets.
- Traders await Friday’s US October PPI report for further inflation clues, with headline expected at 6.6% YoY.
- President Trump quashed hopes for an Iran deal on Truth Social, stating those days have long passed.
Silver price (XAG/USD) gains ground after posting modest losses in the previous day, trading around $50.50 per troy ounce during Asian hours on Friday. However, Silver price may face challenges amid rising Treasury yields reflecting growing expectations of a more aggressive Federal Reserve (Fed) policy outlook.
Rabobank dissects shifts in the 10-year US Treasury yield in 2026
Analysts at Rabobank highlight that their latest work on US rates involves “a detailed decomposition of the 10yr UST yield and how it has changed in 2026,” using this breakdown of the 10-year US Treasury to frame a structured view of long-term yield dynamics and the drivers behind this year’s moves.
Stronger-than-expected US Consumer Price Index (CPI) inflation data released earlier this week has reinforced expectations of a Fed rate hike in December. Fed Governor Christopher Waller said that a 50-basis-point rate hike should be considered if core inflation remains elevated. Traders are now pricing in nearly 85.5% odds of a Fed rate hike when the central bank next meets December 8-9, and put the odds of a half-point hike at 14.5%, according to the CME FedWatch tool.
Attention will shift to Friday’s US Producer Price Index (PPI) report for further clues on inflation and the Fed's decision on interest rates. The headline PPI is expected to show a rise of 6.6% YoY in October, while the core PPI is projected to show an increase of 5.0% YoY during the same report period.
Meanwhile, US President Donald Trump said on Thursday that the US should no longer seek a deal with Iran, per CNBC. “We don’t need a deal with Iran. Those days have long since passed,” Trump wrote in a Truth Social post.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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