Silver Price Analysis: XAG/USD falls below $23 after stubbornly higher US Inflation report

Silver price skids below $23.00 as US Inflation remains stubbornly higher-than-projected.
Monthly headline and core inflation grew by 0.3%.
The argue in favour of keeping a restrictive policy stance would get strengthen ahead.

Sagar Dua FXStreet

Silver price (XAG/USD) drops sharply as the United States Bureau of Labor Statistics (BLS) has reported a hotter-than-projected inflation report for December. The monthly highly inflation was up by 0.3% against the consensus of 0.2% and the former reading of 0.1%. Annually, inflation rose strongly by 3.4% versus. the expectations of 3.2% and the prior release of 3.1%.

The monthly core Consumer Price Index (CPI) grew at a steady pace of 0.3% as anticipated. On an annual basis, the underlying inflation decelerated slightly to 3.9% against 4.0% in November while investors projected a sharp deceleration to 3.8%.

A stubbornly higher US inflation indicates that Federal Reserve (Fed) should not rush for cutting interest rates and would allow them to maintain a restrictive policy stance atleast for the first-half.

On Wednesday, New York President John Williams supported for interest rates remaining higher as more work is needed to get inflation back to 2% target. John Williams said it will only be appropriate to unwind restrictive monetary policy stance only when the Fed is confident that inflation is moving toward 2% on a sustained basis.

Meanwhile, the US Dollar Index (DXY) rises to 102.70 as bets supporting rate cuts by the Fed in March have dropped. The 10-year US Treasury yields have climbed to near 4.05%.

Silver technical analysis

Silver price demonstrates a back-and-forth move around $23.00 on a two-hour scale. The white metal is expected to get direction as investors reconsider bets supporting rate cuts in March. Horizontal support plotted from December 13 low at $22.51 will act as a major cushion for Silver bulls. The broader appeal seems bearish as the asset is trading below the 200-day Exponential Moving Average (EMA).

The Relative Strength Index (RSI) (14) oscillates in the 40.00-60.00 range, which indicates a lacklustre performance.

Silver two-hour

WTI US OIL

Overview
Today last price	73.22
Today Daily Change	1.90
Today Daily Change %	2.66
Today daily open	71.32

Trends
Daily SMA20	72.77
Daily SMA50	74.35
Daily SMA100	80.13
Daily SMA200	77.64

Levels
Previous Daily High	73.55
Previous Daily Low	71.08
Previous Weekly High	74.28
Previous Weekly Low	69.41
Previous Monthly High	76.79
Previous Monthly Low	67.97
Daily Fibonacci 38.2%	72.02
Daily Fibonacci 61.8%	72.61
Daily Pivot Point S1	70.42
Daily Pivot Point S2	69.51
Daily Pivot Point S3	67.95
Daily Pivot Point R1	72.89
Daily Pivot Point R2	74.46
Daily Pivot Point R3	75.36

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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