Silver Price Forecast: XAG/USD moves above $31.50 as US Treasury yields ease

• Silver price appreciated as US Treasury yields declined following weak NY Empire State Manufacturing Index release on Tuesday.
• 2-year and 10-year yields on US Treasury bonds stand at 3.95% and 4.03%, respectively, by the press time.
• The safe-haven Silver may appreciate further as Israel may intensify its ground operations against Hezbollah.

Silver price (XAG/USD) continues its winning streak for the fifth consecutive day, hovering around $31.70 per troy ounce during the Asian trading hours on Wednesday. The non-yielding Silver has found support as US Treasury yields declined in response to disappointing manufacturing data released on Tuesday.

The NY Empire State Manufacturing Index unexpectedly dropped by 23 points to a reading of -11.9 in October, marking its lowest level in five months. This decline indicates a contraction in business activity in New York, following a growth reading of 11.5 in September.

2-year and 10-year yields on US Treasury bonds stand at 3.95% and 4.03%, respectively, at the time of writing. Lower yields boost the appeal of precious metals like Silver. However, last week’s strong US jobs and inflation data have reduced expectations for aggressive easing by the Federal Reserve (Fed) in 2024.

Markets are now forecasting a total of 125 basis points in rate cuts over the next year. According to the CME FedWatch Tool, there is currently a 94.1% probability of a 25-basis-point rate cut in November, with no expectation of a larger 50-basis-point reduction.

On Tuesday, Federal Reserve Bank of Atlanta President Raphael Bostic stated that he anticipates just one more interest rate cut of 25 basis points this year, as reflected in his projections during last month's US central bank meeting. "The median forecast was for 50 basis points beyond the 50 basis points already implemented in September, according to Reuters.

Silver prices are also receiving support from safe-haven flows due to the ongoing uncertainty surrounding the Middle East conflict. Israel may intensify its ground operations against Hezbollah while reinforcing its defenses. Reports from Reuters indicate that Israeli troops have cleared landmines and set up new barriers along the border between the Israeli-occupied Golan Heights and the demilitarized zone adjacent to Syria.