Silver Price Forecast: XAG/USD stays on sidelines around $28.60 ahead of US Inflation data

Source Fxstreet
May 15, 2024 08:23
  • Silver price exhibits strength amid soft US Dollar ahead of US CPI data.
  • US consumer inflation remained stubbornly higher in the first three months of this year.
  • US bond yields drop amid firm speculation that the Fed will pivot to policy normalization from September.

Silver price (XAG/USD) trades in a confined range around $28.60 in Wednesday’s European session. The white metal clings to gains inspired by the soft US Dollar, which fell sharply despite the release of the hot United States Producer Price Index (PPI) inflation report for April.

Annual PPI figures grew expectedly while monthly figures beat expectations. The US Dollar Index (DXY) dips sightly below 105.00. The appeal for dollar-denominated Silver improves due to soft Greenback. After the release of the PPI report, Federal Reserve (Fed) Jerome Powell commented that the overall data was mixed.

When asked about the inflation outlook, Powell ruled out the likelihood of more rate hikes but emphasized keeping the monetary policy restrictive for a longer period to bring inflation down. 10-year US Treasury yields drop further to 4.43% as traders remain confident that the Fed will start lowering interest rates from the September meeting. Generally, falling yields on interest-bearing assets reduce the opportunity cost of holding an investment in non-yielding assets, such as Silver.

Meanwhile, investors await the US Consumer Price Index (CPI) and monthly Retail Sales data for April, which will be published at 12:30 GMT. The economic indicators will significantly influence speculation for Fed rate cuts.

US consumer inflation has remained stubbornly higher in the first quarter of the year. A higher-than-projected US inflation report will deepen fears that the last mile to the 2% inflation road is significantly more persistent than what was previously anticipated.

Silver technical analysis

Silver price recovers sharply after discovering buying interest near the horizontal support plotted from 14 April 2023 high around $26.09 on a daily timeframe. The above-mentioned support was earlier a major resistance for the Silver price bulls. The white metal is approaching the multi-year high at $29.80.

The near-term outlook of Silver has improved as it returns above the 20-period Exponential Moving Average (EMA), which trades around $27.30.

The 14-period Relative Strength Index (RSI) shifts into the bullish range of 60.00-80.00, suggesting that a bullish momentum has been triggered.

Silver daily chart

Economic Indicator

Consumer Price Index ex Food & Energy (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.

Read more.

Next release: Wed May 15, 2024 12:30

Frequency: Monthly

Consensus: 3.6%

Previous: 3.8%

Source: US Bureau of Labor Statistics

The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Crude Oil tests higher ground on quiet Wednesday, WTI touches $81.00 West Texas Intermediate (WTI) US Crude Oil tested into fresh Wednesday highs on thin volume, clipping $81.00 per barrel as commodities drift softly higher despite US exchanges shuttered for the Juneteenth holiday.
Author  FXStreet
West Texas Intermediate (WTI) US Crude Oil tested into fresh Wednesday highs on thin volume, clipping $81.00 per barrel as commodities drift softly higher despite US exchanges shuttered for the Juneteenth holiday.
placeholder
USD/JPY Price Analysis: Steadies as Asian session begins, above 158.00The USD/JPY remains flat as Thursday’s Asian session begins, yet it printed minuscule gains of 0.15% on Wednesday.
Author  FXStreet
The USD/JPY remains flat as Thursday’s Asian session begins, yet it printed minuscule gains of 0.15% on Wednesday.
placeholder
EUR/USD escapes Wednesday’s holiday volatility trap, set for wait to meaningful dataEUR/USD cycled on Wednesday with US markets out for a midweek holiday, and the Fiber heads into the back half of the trading week with mid-tier data on the offering, leaving investors to look ahead to Friday’s Purchasing Managers Index (PMI) activity figures for meaningful data releases to drive sentiment in either direction.
Author  FXStreet
EUR/USD cycled on Wednesday with US markets out for a midweek holiday, and the Fiber heads into the back half of the trading week with mid-tier data on the offering, leaving investors to look ahead to Friday’s Purchasing Managers Index (PMI) activity figures for meaningful data releases to drive sentiment in either direction.
placeholder
Bitcoin Dump Expected, BTC In The “Boring Zone” As Whales ExitBitcoin is under immense selling pressure at spot rates, tracking lower from the all-important resistance level of $66,000. Although BTC may even crash below the psychological line at $60,000 towards $56,500 or May 2024 lows, some analysts are upbeat.
Author  Bitcoinist
Bitcoin is under immense selling pressure at spot rates, tracking lower from the all-important resistance level of $66,000. Although BTC may even crash below the psychological line at $60,000 towards $56,500 or May 2024 lows, some analysts are upbeat.
placeholder
Solana Down 40% But Analyst Says Now’s The Time To Buy SOLSolana, one of the top altcoins, trailing Ethereum and the BNB Chain, has not been spared in the recent correction. After rallying to as high as $210 in Q1 2024, the coin is now sliding, facing strong headwinds, plunging, and following the performance posted by Bitcoin and Ethereum.
Author  NewsBTC
Solana, one of the top altcoins, trailing Ethereum and the BNB Chain, has not been spared in the recent correction. After rallying to as high as $210 in Q1 2024, the coin is now sliding, facing strong headwinds, plunging, and following the performance posted by Bitcoin and Ethereum.
goTop
quote