One of the key data points for US policy is set to be released on Wednesday 11 May at 13:30. That is the US inflation data. The headline is expected to come in at 8.1% y/y and the core reading at 6% y/y, but if we see a print below minimum expectations for both of these data points then watch for USD weakness. The Fed is hiking rates to contain surging inflation, but if the inflation data today hints that the US is passed ‘peak inflation’ then that can weaken the USD and cause yields to drop. Remember, when real yields fall and the USD falls then precious metals like silver and gold usually gain. Will a US CPI miss today send silver soaring higher?

The seasonal pattern for silver is coming into a strong period over the next summer. Between June 29 and August 02 silver has gained 14 times in the last 25 years. The average return has been +3.42% and the annualised return has been 43.87%. Will silver be set to rise on Wednesday ahead of its historical summer seasonal gains?

Major trade risks:

  • If US CPI remains high, and the US has not passed peak inflation, then that will keep up expectations of even more aggressive Fed action.

  • Slowing global growth tends to support the USD as well and that is a key risk to this outlook.

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