Silver may struggle to extend its upside above $22

FXStreet
Updated
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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)



* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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