Silver Price Forecast: XAG/USD Holds Firm Above $69 Ahead of US PCE Inflation Data

Silver spot prices strengthened during Wednesday's Asian session, trading near $69.205, up nearly 1% on the day. Market focus is squarely on the upcoming US Personal Consumption Expenditures price index, viewed as a key reference for the Federal Reserve's next rate move.

**Market Fixated on Core Inflation Clues**

Investors are closely monitoring core PCE data, the Fed's preferred inflation gauge, which will directly impact rate-cut expectations for the December meeting. According to CME FedWatch tool data, as of this week, market odds of a 25-basis-point rate cut next month have risen to 66%, up from 56% a week earlier. Economists broadly forecast core PCE inflation to accelerate to 2.8% year-over-year from 2.7%; stronger-than-expected data could dampen momentum in precious metals.

**Dollar vs. Risk Aversion Dynamics**

A softer dollar is a key factor underpinning silver prices. The US dollar index, which tracks the greenback against a basket of major currencies, has recently retreated to around 106.50, boosting the appeal of dollar-denominated silver to holders of other currencies. However, easing tensions in the Middle East are trimming safe-haven buying for silver. Reports indicate that a previously reached ceasefire agreement between Israel and Iran has, at least temporarily, ended nearly 14 months of conflict between the two sides, somewhat curbing demand for safe-haven assets.

**Technical Landscape and Outlook**

On the technical front, silver has found support near its long-term uptrend line from the $22.30 low, a zone currently situated at the $29.50 level. The 14-day Relative Strength Index is oscillating within the 40-60 range, reflecting resilience amid bullish-bearish tug-of-war. That said, silver has already lost the $32.50 horizontal support level, and any rebound faces a test near the 20-day exponential moving average at $31.40. In the near term, Fed policy expectations, inflation data performance, and dollar fluctuations will jointly dictate silver's next directional move.