Why are AI capex plans, not hawkish Fed bets or Mideast risks, hurting Silver?

• Silver slides to a new 11-month low around $52.60, with US hyperscalers signalling faster AI spending.
• A significant increase in capex is expected in 2027, Alphabet said on Wednesday.
• The Federal Reserve looks almost certain to increase interest rates at its December meeting.

Heavy selling pushes Silver (XAG/USD) to a new 11-month low around $52.60 in Thursday’s European session. Several headwinds are weighing on the white metal: expectations of a hawkish Federal Reserve (Fed) at its December meeting, the risk of renewed escalation in Middle East conflicts and another upward revision to Alphabet’s Artificial Intelligence (AI) spending plans.

What Does the Fed Outlook Mean for Silver?

Lingering hawkishness within the Fed’s committee remains evident, according to analysts at MUFG/BTMU. Following September’s hike, the central bank kept the fed funds rate at 3.75–4.00%, delivering a widely expected pause. However, the analysts emphasise that the decision "included two dissents in favour of another rate increase," and point out that Fed Chair Kevin Warsh "reiterated the Fed’s commitment to returning inflation to 2%".

Investors continue to anticipate more policy action this year, MUFG/BTMU add, noting that "markets continue to price around an 87% probability of a December rate hike,".

For assets that offer no yield, including Silver, higher Fed interest rates are technically an unfavourable development.

An immediate adverse reaction in Silver nevertheless appears less likely, as financial markets have been confident for weeks that the central bank will raise rates in December.

Are the US and Israel Preparing for New Strikes on Iran?

In a note, Deutsche Bank strategists said that "the Wall Street Journal (WSJ) reported the United States (US) President Donald Trump’s administration warning Gulf states to be prepared for a new operation against Iran after the midterms.” Further support for the geopolitical bid came from remarks flagged by Danske Bank’s research team: in his post-election speech, Israel Prime Minister (PM) Benjamin Netanyahu raised the possibility of “renewed joint action with President Trump against Iran”.

A potentially bullish outlook for oil has gained support from concerns over renewed escalation in the Middle East. Yet WTI Oil is trading near $100.74 at the time of writing, down 0.5%, ruling out expectations of an immediate negative effect on Silver.

Are Higher AI Capex Plans Already Weighing on Silver?

Alphabet left its full-year capital expenditure forecast unchanged on Wednesday. In its Q3 earnings call, it had raised guidance from $190 billion to between $195 billion and $205 billion during the second quarter (Q2). Annual capex is projected to cross $200 billion before surpassing $300 billion in 2027. CNBC reported that Alphabet finance chief Anat Ashkenazi told analysts on an earnings call: “We continue to expect our capex to increase significantly in 2027, and will provide further details on our Q4 call,”

Yields on government-backed securities are likely to improve as US hyperscalers raise their AI spending plans. That outcome would reduce the attractiveness of assets such as Silver, which do not offer a yield.

Meta reaffirmed its substantial AI infrastructure spending plans last week as well. Highlighting the company’s ongoing commitment to AI-related investment, Deutsche Bank noted that Meta has “slightly boosted its 2026 capex plan from a $130bn-145bn range to $135bn-145bn,”.

Silver Technical Analysis: Can Buyers Regain Ground?

A bearish near-term bias persists on the daily chart, with XAG/USD at $52.91 and spot prices holding well below the 20-day Exponential Moving Average (EMA) of $57.10. Trading beneath this short-term trend indicator suggests that rallies are likely to remain capped. Meanwhile, the Relative Strength Index (RSI), at 30.01, is slipping into oversold territory, suggesting that downward momentum is stretched rather than reversed.

Any recovery is likely to encounter selling at the first resistance level, the 20-day EMA at $57.10, unless buyers achieve a sustained daily close above it. As noted earlier, the RSI near 30 points to oversold conditions, which could temporarily cushion further declines. Even so, the technical outlook will continue to favour renewed weakness on corrective rebounds until XAG/USD recovers the $57 area.

(The technical analysis of this story was written with the help of an AI tool. Know more.)