Silver Price Forecast: XAG/USD trades near weekly low around $29.50 in quiet trading mood

• Silver price hovers near $29.50 in an illiquid market with the US Dollar and bond yields closing the calendar year on a strong note.
• The Fed sees the federal fund rate heading to 3.9% by the end of 2025.
• Strong US economic growth prospects allowed the Fed to guide fewer interest rate cuts for the next year.

Silver price (XAG/USD) trades cautiously near Friday's low around $29.50 in thin volume conditions before New Year on Monday. The white metal is broadly under pressure as the outlook of the US Dollar (USD) remains firm on expectations that a moderate policy-easing cycle by the Federal Reserve (Fed) in 2025 will keep US Treasury yields elevated.

10-year US Treasury yields are down 0.5% in Monday's European session but are still almost 15% higher this calendar year near 4.60%.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, ticks lower but remains broadly sideways around 108.00.

Market speculation for the Fed to follow a slower rate-cut path next year stemmed from the central bank's latest dot plot, which showed that policymakers collectively see the Federal fund rate heading to 3.9% by the end of 2025.

Fed policymakers shifted their stance on interest rates from 'dovish' to 'cautious' as they were upbeat about the United States' (US) economic growth. Additionally, a slowdown in the disinflation process in the last few months forced them to guide fewer rate cuts for the next year.

This week, investors will focus on the US ISM Manufacturing PMI data for December, which will be released on Friday. The Manufacturing PMI is estimated to have come in at 48.3, slightly lower than 48.4, which suggests that manufacturing output contracted at a slightly faster pace.

Silver technical analysis

Silver price stays below the upward-sloping trendline after a breakdown near $30.00, which is plotted from the February 29 low of $22.30 on a daily timeframe,. The white metal wobbles around the 200-day Exponential Moving Average (EMA), suggesting that the longer-term outlook is uncertain.

The 14-day Relative Strength Index (RSI) falls inside the 20.00-40.00. A fresh bearish momentum would trigger if it sustains in that range.

Looking down, the September low of $27.75 would act as key support for the Silver price. On the upside, the 50-day EMA around $30.90 would be the barrier.

Silver daily chart