Silver Price Forecast: XAG/USD remains above $30.50 due to reinforced Fed's dovish stance

• Silver price appreciated as softer US Inflation sparked speculation of the Fed implementing two interest rate cuts in 2025.
• The dollar-denominated Silver gains support as the weaker US Dollar makes it more affordable for buyers using foreign currencies.
• Silver demand could weaken as overcapacity in China's solar panel industry drives photovoltaic companies to join a government self-discipline program.

Silver price (XAG/USD) remains stable at around $30.70 per troy ounce during the Asian session on Thursday. The price of the non-yielding metal gained support as December's lower-than-expected underlying inflation in the US sparked speculation that the US Federal Reserve (Fed) might implement two interest rate cuts this year.

Meanwhile, 2-year and 10-year US Treasury bond yields stand at 4.27% and 4.66%, respectively, at the time of writing. Both yields dropped by over 2% on Wednesday. Additionally, the US Dollar Index (DXY), which gauges the US Dollar's (USD) performance against six major currencies, is trading near 109.00, extending its downside for the fourth successive session. A weaker USD makes the precious metal more affordable for buyers using foreign currencies, which boosts the demand for Silver.

The US CPI rose by 2.9% year-over-year in December, up from 2.7% in November, matching market expectations. The monthly CPI increased by 0.4%, following a 0.3% rise in November. US Core CPI, excluding volatile food and energy prices, increased by 3.2% annually in December, slightly below both the previous month's 3.3% and analysts' forecast of 3.3%. Core CPI edged up by 0.2% month-over-month in December 2024.

Overcapacity in China's solar panel industry has prompted photovoltaic companies to join a government self-discipline program designed to regulate supply, which could limit the outlook for Silver demand from this key sector. Additionally, reports of forced labor practices in solar panel factories in the Xinjiang region of China have led the US to impose import bans on selected manufacturers.