Silver (XAG) Forecast: Silver Analysis Shows Bullish Outlook Before CPI Release

Silver Hits Record High as Inflation Data Looms

Spot Silver (XAGUSD) is higher as traders await the release of U.S. consumer inflation data at 13:30 GMT.

Key Inflation Report Could Fuel Next Leg Higher

Traders expect today’s Consumer Price Index (CPI) to show consumer prices likely rose 2.7% over the year in December, matching the same 12-month rate of increase in November. Core inflation, excluding food and gas, is expected to have increased to a 2.7% annual rate from 2.6%, after the impact from the government shutdown on the November data worked its way out.

At 12:40 GMT, XAG/USD is trading $85.62, up $0.45 or +0.53%.

Stubborn Inflation Pressures Persist Above Fed Target

If the forecasts are met, it would mean that inflation pressures are edging higher after unexpectedly decelerating in November. This would put the key indicator above the Federal Reserve’s target of a 2% annual gain for nearly a fifth year. One of the top reasons for the stubborn rate is President Trump’s campaign of tariffs, which have pushed prices higher.

One of the biggest worries about this report is that the November data may have been distorted because of the government shutdown, which ended that month, setting up the possibility of a rebound in December. However, over the long run, these distortions are expected to ease out as cleaner data becomes available. Throughout the year, inflation is forecast to fall toward the Fed target as the tariff impact gets absorbed into the economy. Weakness in the labor market as well as lower housing prices are also expected to weigh on the index as the economy moves forward.

Bullish Trend Intact—$100 Target in Sight

Technically, the trend is decisively higher. The intraday inside move reflects trader indecision and impending volatility ahead of the CPI data. A trade through $86.27 will signal a resumption of the uptrend with no resistance in sight, with most major players targeting $100 to $125 this year.

On the downside, old tops at $84.03 and $82.77 are potential minor support points, with a 50% target coming in at $80.06. The long-term daily trend line offers the best support at $76.42 today.

Strategic Opportunities Amid Supply-Demand Imbalance

Looking ahead, once again the market is offering traders a chance to wait for a pullback into support or a value area, or buy strength by taking out offers. The biggest fear at this time is excessive volatility, which usually catches the eye of margin regulators, but the long-term fundamentals remain strong because no one can argue that the demand is real, as is the supply deficit—the two key factors driving this spectacular rally.

More Information in our Economic Calendar.