Silver Price Analysis: XAG/USD delivers wild moves near $23 as US CPI report turns out persistent

Silver price (XAG/USD) demonstrated violent moves near the crucial resistance of $23.00 after the United States inflation in August turned out stickier than expected. The white metal is expected to find a decisive move after a scrutiny of the inflation report by investors.

US Bureau of Labor Statistics reported that monthly headline inflation grew at a 0.6% pace as anticipated by market participants, higher than the former reading of 0.2% due to a rally in gasoline prices. Annualized headline Consumer Price Index (CPI) accelerated to 3.7% vs. expectations of 3.6% and the former release of 3.2%.

Core CPI that strips off volatile food and oil prices expanded at a higher pace of 0.3% than expectations and the prior reading of 0.2%. US core CPI, on an annual basis, softened to 4.3% as projected against July’s reading of 4.7%. Persistence in US inflation figures is expected to feed hopes for one more interest rate increase by the Federal Reserve (Fed) in the rest of the year.

For the September interest rate policy, traders see a 97% chance in favor of an unchanged monetary policy vs. a 93% chance before the US inflation data release, according to the CME Fedwatch Tool. The US Dollar Index (DXY) trades volatile around 104.60.

Silver technical analysis

Silver price remains sideways in a range of $22.80-23.20 from the past four trading sessions ahead of the US inflation data. The white metal demonstrates a volatility squeeze, which is being followed by a breakout in the same. The 50-period Exponential Moving Average (EMA) at $23.00 continues to act as a major barricade for the Silver price bulls. Horizontal support is plotted from August 15 low at $22.23.

The Relative Strength Index (RSI) (14) skids into the bearish range of 20.00-40.00, which indicates that the bearish impulse has been triggered.

Silver two-hour chart