Silver Price Forecast: XAG/USD extends recovery near $30 despite Fed supports fewer rate cuts

• Silver price recovers further to near $29.90 even though US bond yields rise as Fed officials support fewer interest rate cuts in 2025.
• Soft monthly US PCE inflation raised uncertainty over the Fed's shallow rate-cut path.
• Silver price is expected to struggle in an attempt to extend the upward-sloping trendline above $30.00.

Silver price (XAG/USD) extends Friday’s recovery move to near $29.90 in Monday’s European session. The white metal rebounded strongly on Friday from a more than three-month low of $28.75 after the release of the United States (US) Personal Consumption Expenditure Price Index (PCE) data for November, which showed that price pressures grew at a slower pace than expectations.

Core PCE inflation, the Federal Reserve’s (Fed) preferred inflation gauge, rose steadily by 2.8% but slower than estimates of 2.9%. The month-on-month headline and core PCE inflation grew marginally by 0.1%, raising uncertainty over whether the Fed will follow a shallow rate-cut path in 2025, as projected in the Fed’s dot plot from the December policy meeting.

The recent Fed dot plot showed that officials collectively see Federal Fund rates heading to 3.9% by the end of 2025.

Silver prices advanced on Monday even though US Treasury yields remain higher as Federal Reserve (Fed) policymakers support fewer interest rate cuts next year. 10-year US Treasury yields moved higher to near 4.54%. Generally, higher yields on interest-bearing assets weigh on non-yielding assets, such as Silver, as they result in higher opportunity costs for them. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticked higher to near 108.00.

On Friday, a string of Fed officials backed a shallow policy-easing approach amid a slowdown in the disinflation trend, better labor market conditions than previously anticipated, and uncertainty over President-elect Donald Trump's incoming policies.

Silver technical analysis

Silver price recovers to test the breakdown of the upward-sloping trendline near $30.00, which is plotted from the February 29 low of $22.30 on a daily timeframe. The white metal wobbles around the 200-day Exponential Moving Average (EMA), suggesting that the longer-term outlook is uncertain.

The 14-day Relative Strength Index (RSI) rebounds to near 40.00. A fresh bearish momentum would trigger if it fails to break above that level.

Looking down, the September low of $27.75 would act as key support for the Silver price. On the upside, the 50-day EMA around $30.90 would be the barrier.

Silver daily chart