Silver (XAG) Forecast: Cooler CPI Sparks Silver Rally Hopes in Latest Silver News Update

Silver Firms on Cool CPI Reading

Spot Silver prices firmed on Friday after U.S. consumer prices rose less than expected. I think the news not only provided hope that sticky inflation may finally be easing, but it also opens the door for a June Fed rate cut.

According to a U.S. government report, the consumer price index (CPI) for January came in at 2.4%, lower than the expected 2.5% reading and last month’s 2.7% number. More importantly, however, is that the reading matched the level it was at the month after President Trump in April 2025 announced his huge tariff package. This may have come as a surprise to traders who thought it would take months to offset the lingering effects of higher tariffs on inflation.

Muted Reaction Signals Deeper Concerns

Treasury yields fell on the news, but the U.S. Dollar surprisingly firmed, leading to a somewhat muted reaction by silver. I can see that the limited rise in silver suggests there may be more to the recent steep plunge in prices than just yields, the dollar, and the Fed. Perhaps traders are now expressing their concerns over the nomination of Kevin Warsh for Fed Chairman, announced the day after spot silver topped at $121.67 and the exact day it plunged over 30% on January 30.

Fed Uncertainty Remains Key Issue

Stripping away the noise, I think one can see that the mixed Fed could still be a major concern. While some say Warsh will push for lower rates because of his relationship with the seemingly permanently dovish President Trump, others view him as a potential hawk if the labor market and inflation data don’t get in sync. In my opinion, the timing of the next Fed rate cut may very well be determined by whether the regional Fed presidents, who have taken a more aggressive posture on fighting inflation, get swayed to the dovish side if inflation continues to lean toward the softer side.

Cautious Positioning After Bubble Burst

I think silver traders seem to be taking it slow after the speculative bubble burst late last month. Higher margins and elevated volatility seem to be keeping many of the smaller players on the sidelines, allowing the bigger investors to accumulate silver while holding prices in a range.

Traders are also questioning if the supply/demand deficit story that circulated throughout 2025 and parts of 2026 is still controlling silver prices. I can see traders are also watching the gold/silver ratio, which is now more bullish for gold.

Tech Selloff May Be Forcing Liquidation

Furthermore, I believe weakness in the U.S. stock market and hard selloff in the technology sector may be leading to liquidation in silver to meet margin calls in the equity market.

Overall, other than the consolidation pattern, which is pretty normal after a more than 30% plunge, I think silver traders seem to be paying closer attention to outside events and economic data, leading to more calculated buying than just two weeks ago when aggressive speculators were chasing the market higher.

Outlook: More Consolidation Ahead

I expect to see more consolidation until the direction of the Fed becomes clear.

More Information in our Economic Calendar.