Silver retreats ahead of US PCE data, but underlying support persists

• Silver extends its correction on Tuesday and loses 1.43% as investors reduce exposure ahead of US inflation data.
• US Treasury bond buybacks revive concerns over debt and currency debasement, potentially limiting the metal’s decline.
• Industrial demand from solar panels, electric vehicles and artificial intelligence infrastructure continues to provide structural support for Silver.

Silver (XAG/USD) extends its decline on Tuesday and trades around $67.50 at the time of writing, down 1.43% on the day. The precious metal corrects for a second consecutive day as investors remain cautious ahead of Wednesday’s release of the United States (US) Personal Consumption Expenditures (PCE) Price Index, while attention also turns to the Jackson Hole Symposium.

The core PCE inflation, the Federal Reserve’s (Fed) preferred gauge for assessing price pressures, is expected to remain steady at 3.4% YoY in July. A stronger-than-expected reading could fuel concerns over tighter monetary policy and weigh on Silver, while easing inflation could strengthen expectations for a monetary policy hold and support precious metals.

Investors are also monitoring signals from the US labor market. The four-week average of the ADP Employment Change rises to 11.75K jobs per week in early August, up from 9.5K previously. The improvement suggests some recovery in private-sector hiring, although it does not fully dispel concerns about the trajectory of the US economy.

Despite Silver’s correction, US fiscal risks could limit bearish pressure. The US Treasury plans to double its buyback operations for longer-dated bonds, while markets assess the possibility that Treasury Secretary Scott Bessent could deploy up to $1 trillion from the Treasury General Account (TGA). These measures could affect market liquidity and bond yields while reviving the US Dollar (USD) debasement narrative against a backdrop of elevated public debt.

Geopolitical tensions provide another potential source of support for precious metals. Commerzbank notes that the expansion of US sanctions against Iran, including measures targeting Oil, shipping, technology, Gold and digital assets, adds to geopolitical uncertainty. Stronger safe-haven demand could therefore help contain Silver’s losses.

Finally, Silver’s industrial fundamentals remain supportive. Demand continues to benefit from the green-energy transition, particularly photovoltaic solar panel production and electric vehicles, as well as the rapid expansion of artificial intelligence data centers. This combination of industrial demand and safe-haven appeal could continue to underpin Silver despite Tuesday’s correction.

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $67.92, keeping a capped near-term tone as price holds below the 100-hour Simple Moving Average (SMA) at roughly $68.01 while remaining above the 200-hour SMA around $66.40. This configuration, with shorter-term resistance overhead and longer-term support beneath, suggests an ongoing consolidation within a broader uptrend, while the Relative Strength Index (RSI) at about 44.00 hints at subdued bullish momentum and leaves the metal vulnerable to further corrective pressure if support gives way.

On the topside, initial resistance is aligned with the 100-hour SMA near $68.01, followed higher by a horizontal barrier at $68.50 and then a more distant cap around $70.00. On the downside, immediate support emerges at $67.50, with further cushions at $66.50 and the 200-hour SMA clustered close by near $66.40, where a break would likely shift the bias more decisively in favor of sellers.

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