Silver Price Forecast: XAG/USD drops below $23.00 ahead of US Headline CPI

• Silver Price extends its losses due to recovery in the US Dollar (USD).
• Upbeat US Treasury yields could provide support in undermining the Silver asset.
• Elevated inflation figures could further reinforce the Fed’s hawkish tone, supporting the Greenback.

Silver price continues to lose ground on the second day, trading lower around $22.90 during the Asian session on Wednesday. The pair is experiencing downward pressure due to the improved US Dollar (USD).

Additionally, the upbeat US Treasury yields contributed to underpinning the strengthening of the Greenback ahead of the release of Consumer Price Index (CPI) data from the United States (US). The yield on the US 10-year bond improved to 4.28% by the press time, snapping the recent losses.

Any inflation aberration could further reinforce the hawkish sentiment following the likelihood of a 25 basis point (bps) interest rate hike by the US Federal Reserve (Fed) in either the November or December meetings.

Additionally, there's an expectation that the Fed will maintain higher interest rates over an extended period. These developments could potentially lead to a rise in the US bond yields, which may negatively impact the silver prices.

US CPI is expected to exhibit a 0.5% month-on-month improvement from the previous month's reading of 0.2%. Moreover, the Core CPI figure is anticipated to remain steady at 0.2%. These figures may provide valuable insights into inflation trends in the US economy and can have a significant impact on market sentiment and trading decisions about the Silver asset.

US Dollar Index (DXY), which assesses the performance of the US Dollar (USD) against a basket of the other major six currencies, trading higher around 104.70. DXY snaps the three-day losing streak.

Moreover, the robust Greenback is expected to maintain its resilience, primarily because it has the capacity to absorb the effects of higher interest rates. This strength can make the US Dollar (USD) more attractive to investors.