Silver Price Forecast: XAG/USD surges to near $53 despite rising US bond Yields

Silver (XAG/USD) experienced a significant surge, reaching near $53.00 during the European trading session on Wednesday. The increase occurred despite concerns about the Federal Reserve potentially raising interest rates dramatically, following the release of higher-than-anticipated US Consumer Price Index (CPI) data for October.

Deutsche Bank highlighted the CPI data as the main driver of the bond selloff, noting that the core CPI figure for October was above expectations at +0.30% (compared to the expected +0.2%). The annualized pace for core CPI is now running at +3.75%, the fastest pace since April 2024. This made it increasingly difficult to dismiss the inflation surge as a temporary fluctuation.

Meanwhile, headline CPI numbers showed even greater growth, with monthly headline CPI at +0.35% (above expectations) and a 3-month annualized pace of +5.72%. In response, 10-year US Treasury Yields surged by 2.4%, reaching around 5%. Economists at Commerzbank cautioned that price pressures in the US remain high, despite a slight reduction in the increase from September.

They emphasized that core inflation, a key indicator of the underlying trend, is still too high and not declining. The strong economy and ongoing Middle East conflict suggest that inflation is unlikely to ease in the near term, keeping Silver prices under pressure. As of the daily chart, XAG/USD was trading at $52.94, below the 20-day Exponential Moving Average ($53.89), indicating a bearish near-term trend.

Initial resistance to a potential recovery is defined by the 20-day EMA at $53.89. If the price sustains a break above this level, it could soften the current bearish bias and pave the way for a more substantial recovery.