Silver may struggle to extend its upside above $22

Silver prices faced some selling pressure after the US core inflation met expectations in September. With a slight increase in the overall Consumer Price Index (CPI) due to surging global oil prices, silver struggled to expand its upward momentum above the resistance level of $22.23.

Following the US September inflation report that largely met expectations, silver encountered selling pressure above $22. The US Bureau of Labor Statistics reported a 0.3% growth in the core Consumer Price Index (CPI), in line with expectations. The annual core CPI data slowed from the previously announced 4.3% to 4.1%, as expected.

The overall monthly CPI growth rate was 0.4%, higher than the anticipated 0.3% by investors. The annualized overall inflation data remained steady at 3.7%, with an expectation of 3.6%. The overall CPI data saw a slight increase due to rising gasoline and food prices, driven by surging global oil prices.

The US Dollar Index experienced a sharp uptrend after strong buying interest emerged near 105.50. The strength in the US Dollar Index is driven by investors hoping for a shift towards a hawkish stance from Federal Reserve policymakers regarding interest rate prospects. Slowing down the process of reaching the 2% inflation target might increase bets on a more hawkish stance from the Federal Reserve.

Meanwhile, the S&P 500 index opened slightly higher as market sentiment remained optimistic. Investors anticipate that the impact of the Israel-Hamas conflict will be limited if other Middle Eastern countries refrain from intervening.

Technical Analysis

Silver prices struggled to break above the resistance level of $22.23, the low point of August 15th, on the two-hour timeframe. Earlier, silver demonstrated a strong rebound after breaking out of a symmetrical triangle chart pattern. The 20-period exponential moving average (EMA) at $22.00 continues to provide support for silver bulls.

The Relative Strength Index (RSI) (14) is trading within the bullish range of 60.00-80.00, indicating an active bullish momentum.

(Chart source: FXStreet, two-hour silver price chart)