Silver Price Forecast: XAG/USD fluctuates amid US inflation data, Fed’s commentary

• Silver's volatility driven by recent US CPI figures showing higher headline inflation, sparking concerns over Fed's policy path.
• Fed officials' cautious remarks on rate cuts contribute to market uncertainty, influencing Silver's price dynamics.
• Decline in US Treasury yields, particularly at the short end, adds pressure on the Dollar, impacting precious metal markets.

Silver price remained volatile during Thursday’s session after data from the United States (US) probed that inflation is stickier than expected, while Federal Reserve (Fed) officials commented that it’s too soon to expect a rate cut in March’s meeting. The XAG/USD exchanges hands at $22.70, down 0.77%.

Fundamentally speaking, the fall of US Treasury yields eased the pressure off Silver prices, which hit a two-month low of $22.48, before trimming its losses. Headline inflation in the US rose by 3.4% YoY exceeding forecasts for an uptick of just 3.2%. The same report revealed that core numbers dipped below 4% YoY, lower than November’s data, though they exceeded estimates.

In the meantime, some Fed officials had stressed that although progress on lowering inflation is seen, the latest reports suggest it’s becoming stickier than expected. Even though they had opened the door to ease monetary policy at some point, they remained muted about providing clues regarding the first cut.

Despite that, US Treasury yields are falling off the cliff, with the short end of the curve dropping twice the basis points compared to the belly. The US 2-year Treasury note yield is down ten basis points, at 4.26%, while the 10-year note yield sits at 3.98%, down by four basis points. This is weighing on the Greenback as the US Dollar Index (DXY) pares its earlier gains, almost flat at 102.39.

XAG/USD Price Analysis: Technical outlook

Silver’s is neutral to downward biased, though it faced solid support at around $22.51, the latest cycle low hit on December 13, with buyers stepping in and lifting the XAG/USD spot toward current levels. Nevertheless, if Silver finishes the session below $23.00, that will keep buyers pressured. XAG/USD's first support would be the January 11 low of $22.48, followed by $22.00 a troy ounce, ahead of the November 13 low of $21.88. Otherwise, if buyers reclaim $23.00, that could open the door to challenge the 100-day moving average (DMA) at around $23.26.