Silver Price Forecast: XAG/USD slides to new 11-month lows around $50.50

• Sticky inflation and robust economic growth strengthened expectations of a Federal Reserve rate rise, weighing on Silver.
• A rise in September PCE inflation, alongside third-quarter GDP growth of 3.4%, signalled that the US economy remained resilient.
• With Fed rates held steady before the midterm elections, markets assigned a 75% probability to a December increase.

Persistent inflation and resilient growth in the United States (US) strengthened expectations that the Federal Reserve could raise interest rates later this year, putting Silver under pressure. Against that backdrop, Silver (XAG/USD) fell for a third consecutive day, trading near a new 11-month low of $50.69 per troy ounce during Friday’s European session.

September’s US PCE price index rose 0.5% month-on-month, the sharpest increase since March, underscoring continued inflationary pressure. The annual inflation rate reached 3.6%, while core PCE inflation advanced to 3.1% year-on-year.

Third-quarter US GDP growth also indicated sustained economic strength. At an annualised 3.4%, the expansion exceeded market expectations of 3.2%, supported chiefly by steady consumer spending and strong investment in AI-related sectors.

Against this economic backdrop, the Federal Reserve left interest rates unchanged on Wednesday, ahead of the forthcoming US midterm elections. Investors nonetheless continued to assign a high probability to further monetary tightening.

The CME FedWatch Tool puts the probability traders assign to a 25-basis-point December rate rise at approximately 75%. That represents a modest decline from the 84.2% recorded a day earlier.

Silver and PGMs underperform as macroeconomic pressures weigh on demand

Diverging performance across precious metals remains a feature of the post-FOMC environment, according to TD Securities. As the bank observes, "while gold remains fairly resilient post-FOMC, industrial precious metals are skewing to the downside, with silver and PGMs materially underperforming as macro headwinds and the prospect of tightening policy weigh on demand outlooks." As investors reconsider demand prospects under a potentially tighter policy regime, this weaker performance highlights the mounting pressure on metals with greater industrial exposure compared with Gold.