Silver Price Forecast: XAG/USD consolidates near $41.00 ahead of US CPI

• Silver consolidates near $41.00 as traders await the key US CPI report.
• A stronger CPI print may fuel Dollar strength and weigh on precious metals, while softer data would reinforce Fed rate cut bets.
• Technical signals show bearish RSI divergence, with $40.50 as key support and $41.50 as immediate resistance.

Silver (XAG/USD) trades under mild pressure on Thursday as a firm US Dollar (USD) keeps the white metal subdued ahead of the highly anticipated US Consumer Price Index (CPI) release. At the time of writing, XAG/USD is consolidating around $41.00, pausing after marking a fresh 14-year peak around $41.67 earlier this week.

All eyes are on the August US CPI report due at 12:30 GMT, which is expected to provide the final policy cue before next week's Federal Reserve (Fed) meeting.

Headline inflation is expected to pick up modestly, rising 0.3% on the month and pushing the annual rate to 2.9%, while core CPI is seen steady at 0.3% MoM and 3.1% YoY.

A stronger-than-expected print could fuel the US Dollar's rebound and lift Treasury yields, pressuring precious metals in the short term. Conversely, a softer reading would bolster expectations for a Fed interest rate cut at next week's meeting, offering renewed support to Silver. Lower borrowing costs reduce the opportunity cost of holding non-yielding assets such as Silver, keeping the broader bullish tone intact.

From a technical perspective, Silver has been consolidating within a tight $41.50-$40.50 range since early September. On the daily chart, a bearish divergence on the Relative Strength Index (RSI) points to fading upside momentum, while the flattening Moving Average Convergence Divergence (MACD) histogram signals weakening bullish pressure.

Immediate support lies at $40.50, with a break below exposing the 21-day Simple Moving Average (SMA) near $39.52. On the upside, a sustained move above $41.50 would reduce the significance of the divergence and open the door toward the $42.00 psychological barrier and beyond.