Silver falls despite gold's resilience
Silver (XAG/USD) struggled to keep pace with gold, trading around $30.96 after hitting an intraday low of $30.87. While geopolitical tensions and expectations for Fed rate cuts supported gold, silver remained more sensitive to changes in economic sentiment and market risk appetite, which contributed to the weak performance.
Rising U.S. Treasury yields and a strong dollar are adding to the pressure on silver as it competes with interest-bearing assets. Despite these headwinds, analysts note that silver tends to follow gold's trajectory, despite increased volatility during times of uncertainty.
US inflation and dollar strength shape market sentiment
On the economic front, the US Consumer Price Index (CPI) rose 2.7% year-on-year in November, slightly higher than October's 2.6%. Core CPI, which excludes food and energy, rose to 3.3%, indicating continued inflationary pressures. Additionally, the producer price index (PPI) rose 0.4% in November, further hinting at inflation concerns.
Markets are pricing in a 25 basis point (bp) rate cut at next week's Federal Open Market Committee (FOMC) meeting, but the dollar remains firm on strong bond yields and demand for safe-haven assets. This dynamic limits gold's upside potential, even as geopolitical tensions push investors toward safe-haven assets.
While gold remains a focus for traders navigating uncertain markets, silver's performance highlights its sensitivity to changing economic and geopolitical conditions.
short term forecast
Gold prices held steady at $2,688, supported by demand for safe-haven assets and expectations for Fed rate cuts. The main resistance level is $2,701. Support remains at $2,675 amid cautious sentiment.
