Silver Price Forecast: XAG/USD slides as US CPI tops estimates

US inflation data released on Tuesday sent Silver (XAG/USD) prices plummeting as the US Dollar (USD) strengthened and US Treasury yields rose. The Consumer Price Index (CPI) surged by 0.4% month-over-month in October, surpassing forecasts but falling short of September's 0.6% gain. Core CPI, excluding food and energy, also increased by 0.3%, matching September's rate and exceeding expectations.

Dallas Fed President Lorie Logan warned that the Federal Reserve (Fed) may need "at least two more 25-basis-point (bps) rate increases" and that a more rapid pace could be possible this winter. Fed Governor Christopher Waller even suggested a half-point rate hike in December if October's core CPI comes in at "around 0.3% or higher."

The CME FedWatch Tool now indicates an 89.2% chance of a 25-bps rate hike in December and a 10.8% probability of a 50-bps increase. Traders remain wary of further Federal Reserve tightening, which tends to push investors away from non-yielding assets like Silver. On a technical level, XAG/USD is under a strong bearish bias, trading below key moving averages and showing a relatively weak Relative Strength Index (RSI) of 38.

Immediate support is found at the $50 level, with deeper losses potentially emerging if this level is breached. Resistance appears at the 21-day SMA around $54, followed by the $55 horizontal barrier, beyond which the 100-day SMA at $60.50 and the $65 horizontal level await, leading to the longer-term 200-day SMA near $68.60.