Silver Price Analysis: XAG/USD holds above $23.00 ahead of US inflation data

On Tuesday’s session, Silver’s spot price XAG/USD traded neutral around $23.00, mainly limited to a strong USD whose DXY index jumped to a high of 104.90 and US yields slightly increased.

In addition, the economic calendar had nothing relevant to offer, and markets remained cautious ahead of the August US Consumer Price Index (CPI, expected to have accelerated by 0.5% MoM, while the Core measure is projected to increase by 0.2% MoM. At the same time, the expectations for Federal Reserve (Fed) tightening remain steady. The CME FedWatch tool indicates that while the market has already priced in a pause for the upcoming September 20 meeting, there's still a 40% chance of one last interest rate hike in either December or November. 

A hot inflation reading may fuel a rise in US bond yields, which could negatively impact Silver prices as they are considered the opportunity cost of holding non-yielding metals.

In the meantime, US Yields are edging higher on the day. The 10-year bond yield is seen at 4.29%, with mild gains on the day. The 2-year yield stands at 5.00% with 0.20% gains, and the 5-year yield is at 4.42%, also with mild gains. 

XAG/USD Levels to watch 

Upon analysing the daily chart, a neutral to bearish outlook is seen for the XAG/USD, with the bears maintaining control and bulls struggling to make a significant move. With a flat slope below its midline, the Relative Strength Index (RSI) suggests a period of stability in negative territory, while the Moving Average Convergence (MACD) exhibits shorter red bars. On the larger time frame, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), suggesting that the buyers are struggling to overcome the overall bearish trend and the bears are still in charge.

Support levels: $22.80, $22.60, $22.30

 Resistance levels: $23.50 (20 and 200-day SMA convergence), $23.70, $24.00.

 XAG/USD Daily Chart