Silver Price Forecast: XAG/USD posts fresh monthly high around $32.30 on firm dovish Fed bets

• Silver price posts a fresh five-week high around $32.30 as traders price in Fed rate cut bets for the policy meeting on Wednesday.
• A moderate growth in rental prices boosted Fed dovish bets.
• Investors await the outcome of China's closed-door economic work conference.

Silver price (XAG/USD) refreshes an almost five-week high at around $32.30 in Thursday's European session. The white metal strengthens as traders have fully priced in the Federal Reserve (Fed) to cut interest rates again by 25 basis points (bps) to 4.25%-4.50% in the policy meeting announcement on Wednesday, a scenario that is favorable for non-yielding assets, such as Silver, as it reduces their opportunity costs.

Fed dovish bets escalated after the release of the United States (US) Consumer Price Index (CPI) report for November, which showed that rental prices rose at a moderate pace. Annual headline and core CPI - which excludes volatile food and energy prices - rose by 2.7% and 3.3%, respectively, in line with expectations.

The US Dollar Index (DXY), which gauges the Greenback's value against six major currencies, ticks lower to near 106.50. 10-year US Treasury yields advance to near 4.30%.

Going forward, investors will focus on the outcome of China's two-day economic work conference, a high-level meeting of China's top leadership that will show the economic agenda for 2025. The administration is expected to release a mammoth stimulus package to boost domestic consumption and stabilize the realty sector.

The demand for Silver as a metal would strengthen if the Chinese government released a robust economic package, given its application in various industries such as solar energy, electric vehicles, and mining.

Silver technical analysis

Silver price refreshes monthly higher near $32.30 after breaking above the two-day resistance of $32.00. A bull cross, represented by 20- and 50-day Exponential Moving Averages (EMAs), suggests a fresh bullish trend.

The 14-day Relative Strength Index (RSI) approaches 60.00. Should the bullish momentum trigger if the RSI breaks above 60.00

Looking down, the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe, would act as key support for the Silver price. On the upside, the horizontal resistance plotted from the May 21 high of $32.50 would be the barrier.

Silver daily chart