Silver Price Forecast: XAG/USD tumbles as the greenback pares its losses

• XAG/USD extended its weekly losses by almost 3%.
• FOMC’s minutes showed that officials prefer overdoing tame inflation over avoiding recession.
• Investors brace for September’s US Consumer Price Index (CPI), which could shed some light regarding Fed’s path on monetary policy.

Silver price extended its losses to four straight days, albeit US Treasury bond yields easing from weekly highs, courtesy of FOMC minutes showing Fed officials worried about declaring victory on inflation.

XAG/USD slides on overall market mood

The XAG/USD hit a daily high of $19.30 earlier in the European session, though as the session progressed, it slid to the day’s low at $18.84 before recovering some ground. At the time of writing, XAG/USD is trading at $19.05, 0.77% below its opening price.

US equities finished Wednesday’s session down with minimal losses. The mood shifted sour on the BoE’s emphasizing that the emergency bond-buying program would end by October 14, while September FOMC minutes weighed on risk-perceived assets.

FOMC’s minutes reflected that policymakers “emphasized the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action.” Officials added that it would be necessary to “calibrate the pace of further rate hikes” to reduce the impact on the US economy.

About a possible Fed pivot, several Fed members expressed the need to maintain a restrictive policy for as long as necessary,” reiterating the need to increase rates higher for longer.

Aside from this, traders are bracing for September’s US inflation report on Thursday. Wednesday’s data showed that the Producer Price Index (PPI) grew by 8.5% YoY, whiles excluding volatile items like food and energy, the so-called core PPI rose by 7.2%, less than the previous reading and forecasts.

Given the backdrop, the odds of a 75 bps rate hike lie at 82%, as shown by the CME FedWatch Tool. Therefore, the white metal would likely remain under pressure, which would refrain Silver buyers from opening fresh bets as US T-bond yields rise.

XAG/USD Key Technical Levels