Silver slips below $65, but cooling US inflation keeps downside in check

• Silver falls 0.64% on Thursday and trades around $64.90 as investors await US producer inflation data.
• Cooling US inflation in July reduces expectations of a September rate hike and supports precious metals.
• Falling US Treasury yields limit pressure on the white metal, while energy risks keep the inflation outlook uncertain.

Silver (XAG/USD) trades lower around $64.90 on Thursday at the time of writing, down 0.64% on the day. The white metal consolidates after its recent advance as investors refrain from taking large positions ahead of the release of US producer inflation data. Despite the pullback, easing expectations for tighter monetary policy from the Federal Reserve (Fed) continue to provide support for Silver.

The latest United States (US) inflation data reinforced the view that price pressures are gradually easing. The headline Consumer Price Index (CPI) slowed to 3.4% YoY in July from 3.5% in June. Meanwhile, the core CPI, which excludes volatile food and energy components, eased to 2.5% from 2.6% previously, in line with expectations.

These figures reduce the need for the Fed to raise interest rates quickly. According to the CME FedWatch Tool, markets now assign a 38% chance of a rate hike in September, down from 54% a week earlier. This reassessment of the monetary policy outlook is also weighing on short-term US Treasury yields, an environment that generally benefits non-yielding assets such as Silver.

Attention now turns to the US Producer Price Index (PPI) for July, due on Thursday at 12:30 GMT. Another sign of easing inflationary pressures could reinforce expectations that the Fed will keep rates unchanged and support Silver. Conversely, an upside surprise in producer prices could revive expectations of further monetary tightening and put additional pressure on the white metal.

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $64.88, holding above the 100-period simple moving average (SMA) at $64.78 and the 200-period SMA at $62.41, which keeps the near-term bias constructive despite the recent pullback from the mid-$66s. The loss of momentum is reflected in the Relative Strength Index (RSI) easing toward the mid-40s, hinting at a consolidative phase rather than outright bearish pressure while price remains supported by these underlying averages.

On the downside, initial support is seen at the 100-period SMA around $64.78, ahead of the horizontal floor near $63.00 and the deeper structural base provided by the 200-period SMA at $62.41. On the topside, XAG/USD would need to reclaim the former uptrend support line turned barrier around $66.65, followed by the horizontal resistance near $66.80, to revive the bullish sequence toward fresh highs.

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