Silver Price Forecast: XAG/USD slides further to $30.00 as US Dollar extends rally

• Silver price weakens as Trump’s victory is expected to boost US growth and consumer spending.
• The US Dollar rallies on expectations that the Fed could follow a slower policy-easing approach.
• Investors expect the Fed to cut interest rates by 25 bps in December.

Silver price (XAG/USD) falls further to near $30.20 in European trading hours on Tuesday. The white metal weakens as the US Dollar (USD) strengthens on expectations that President-elected Donald Trump’s policies will boost the United States (US) economic growth and inflationary pressures.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, inches close to the key resistance of 106.00. The higher US Dollar makes the Silver price an expensive bet for investors. Meanwhile, 10-year US Treasury yields jump to near 4.37%. Higher yields on interest-bearing assets reduce the opportunity cost of holding an investment in non-yielding assets, such as Silver.

Trump vowed to raise import tariffs by 10% and lower corporate taxes in his election campaign, a move that will increase demand for domestic goods, boost labor demand and business investment, which will eventually prompt inflationary pressures and allow the Federal Reserve (Fed) to follow a more gradual rate-cut cycle.

In the December meeting, there is a 65% chance that the Fed will cut interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

Going forward, investors will focus on the US Consumer Price Index (CPI) data for October, which will be released on Wednesday for fresh interest rate guidance. Also, a slew of Fed officials, including Chair Jerome Powell, are set to speak this week.

Apart from the US Dollar’s strength, an absence of direct stimulus in the Chinese economic package to revive the economy has also weighed on the Silver price. Silver, as a metal, has applications in various industries associated with renewable energy and mining. A scenario of bleak growth in China weighs on the Silver price.

Silver technical analysis

Silver price declines toward the upward-sloping trendline around $29.00, plotted from the February 28 low of $22.30. The white metal weakened after breaking below the horizontal support plotted from the May 21 high of $32.50.

The near-term trend of the Silver price has weakened as the 20-day Exponential Moving Average (EMA) starts declining, which trades around $30.26.

The 14-day Relative Strength Index (RSI) slides below 40.00. A bearish momentum will trigger if the RSI (14) sustains below the same.

Silver daily chart