Silver is falling 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 have supported gold, silver remains more sensitive to shifts in economic sentiment and market risk appetite, which have contributed to the weaker performance.
Rising US Treasury yields and the strength of the dollar have put further pressure on silver as the metal competes with interest-earning assets. Despite these headwinds, analysts note that silver tends to follow gold’s trajectory, albeit with increased volatility during periods of uncertainty.
US inflation and strong dollar determine market sentiment
On the economic front, the US Consumer Price Index (CPI) rose 2.7% year-on-year in November, slightly above October’s 2.6%. The core CPI, excluding food and energy, rose to 3.3%, indicating continued inflationary pressures. Moreover, the Producer Price Index (PPI) rose 0.4% in November, further indicating inflation concerns.
While markets have priced in a 25 basis point rate cut at next week’s Federal Open Market Committee (FOMC) meeting, the dollar has remained strong thanks to robust bond yields and safe-haven demand. These dynamics have limited upside potential for gold, even as geopolitical tensions drive investors toward safe assets.
Gold remains a focal point for traders navigating uncertain markets, while silver’s performance underlines its sensitivity to changing economic and geopolitical landscapes.
Short-term forecasting
The gold price remains stable at $2,688, supported by safe haven demand and expectations of a Fed rate cut. Key resistance at $2,701; Support remains at $2,675 amid cautious sentiment.