Silver (XAG/USD) edged lower on Friday, trading around $48.85 per troy ounce, down 0.10% on the day, as the metal consolidates below the key $49 level. After a strong rally driven by mounting expectations of further Federal Reserve (Fed) rate cuts, the market appears to be taking a breather ahead of next week’s monetary policy meeting.
Fed outlook and softer inflation underpin silver
The latest US Consumer Price Index (CPI) data showed headline inflation rising 0.3% month-on-month in September, missing expectations of 0.4%. Core inflation eased to 3.0% year-over-year, reinforcing expectations that the Fed will continue its easing cycle. Markets have fully priced in a 25-basis-point rate cut at the October 29–30 meeting and see another reduction likely in December.
Lower interest rates tend to favor non-yielding assets such as silver, as they reduce the opportunity cost of holding precious metals. Meanwhile, the US Dollar (USD) remains slightly on the defensive, and Treasury yields continue to edge lower — both factors lending additional support to silver prices.
Persistent political uncertainty surrounding the prolonged US government shutdown has also weighed on investor sentiment, bolstering safe-haven flows into metals.
Mixed US data keeps outlook balanced
While soft inflation data strengthens the case for policy easing, recent macroeconomic releases painted a mixed picture of the US economy. S&P Global’s October Composite Purchasing Managers Index (PMI) rose to 54.8 — the fastest pace of private-sector growth in three months. The Services PMI climbed to 55.2 from 54.2, and Manufacturing PMI edged higher to 52.2 from 52.0, signaling steady economic expansion.
However, consumer confidence indicators continue to weaken. The University of Michigan’s October survey showed sentiment falling to 53.6 from 55.1, with expectations slipping to 50.3. Long-term inflation expectations inched up to 3.9%, underscoring that households remain cautious despite improving business activity.
Overall, the data suggest that while the corporate sector remains resilient, consumer headwinds persist — a combination that supports a gradual approach to Fed policy easing.
Technical outlook: silver stabilizes with buyers eyeing breakout above $49
From a technical perspective, silver remains resilient despite the recent pause in momentum. The $49 handle continues to act as key psychological resistance, while downside support is seen near $48.40 and $48.00. A clear break above $49.00 could open the door for a retest of the $50 level, last seen in early 2021.
On the downside, a sustained move below $48.00 may trigger a deeper correction toward $47.50. Overall, as long as the Fed maintains a dovish policy stance and Treasury yields remain subdued, silver’s medium-term bias stays tilted to the upside, with dips likely to attract fresh buying interest.
