- Silver gains 1.60% on Wednesday despite rising US Treasury yields and a stronger US Dollar.
- Higher-than-expected US inflation reinforces expectations of further Federal Reserve rate hikes.
- Deutsche Bank and Commerzbank warn that persistent inflation could keep monetary policy restrictive.
Silver (XAG/USD) advances on Wednesday, gaining 1.60% to trade around $52.35 at the time of writing. The precious metal strengthens despite rising US Treasury yields and a stronger US Dollar (USD), as hotter-than-expected inflation data fuels expectations of further interest rate hikes by the Federal Reserve (Fed).
The US Consumer Price Index (CPI) rose 0.4% in October, exceeding market expectations of 0.3%, although slowing from September's 0.6% increase. Core CPI, which excludes food and energy prices, increased 0.3%, above the 0.2% forecast and matching the previous month's reading.
These figures reinforce concerns about persistent inflation and encourage investors to anticipate more aggressive monetary tightening. According to the CME FedWatch tool, markets now fully price in a December Fed rate hike, with an 88% chance of a 25-basis-point (bps) increase and an 12% chance of a larger 50 bps move.
Fed Governor Christopher Waller previously indicated that a 50 bps increase could be necessary if October core inflation reached 0.3% or higher, a threshold now met by the latest figures. The inflation surprise triggered a sharp sell-off in US government bonds on Tuesday, pushing the benchmark 10-year Treasury yield briefly above 5%.
Deutsche Bank analysts highlight that core inflation has increased by 0.3% for three consecutive months, bringing its three-month annualized rate to 3.75%, the fastest pace since April 2024. The bank considers that this persistence makes it increasingly difficult to dismiss inflationary pressures as temporary.
Similarly, Commerzbank economists warn that underlying inflation remains too elevated and is no longer declining. The German bank expects inflation to remain persistent throughout 2026, with a potential easing only emerging in 2027, amid resilient economic activity and ongoing geopolitical tensions in the Middle East.
Meanwhile, the US Dollar Index (DXY) rises 0.68% on Wednesday, extending its recovery for a second consecutive day. Higher Treasury yields and a stronger Greenback generally weigh on non-yielding assets such as Silver. Nevertheless, the metal's advance suggests resilient buying interest, although expectations of further Fed tightening could limit additional gains.
Silver technical analysis
In the one-hour chart, XAG/USD trades at $52.31. The metal holds above the 200-period simple moving average (SMA) at $51.52, but it is capped by the 100-period SMA at $52.37, leaving the near-term tone neutral to slightly heavy while price consolidates between these key averages. The Relative Strength Index (RSI) at 45.93 sits just below the midline, hinting that bullish momentum has faded after the recent spike toward $53.00, with neither side currently showing decisive control.
On the topside, immediate resistance is aligned at the 100-period SMA at $52.37, with further hurdles at the horizontal levels of $53.20 and $53.72, which guard the recent recovery highs. On the downside, initial support is seen at the 200-period SMA around $51.52, ahead of the horizontal floor at $51.10; a sustained break beneath these levels would open the door to a deeper correction, while holding above them would keep XAG/USD confined in a range beneath the nearby moving-average cap.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.