Silver Price Forecast: XAG/USD corrects from $25 as Fed’s preferred inflation tool remains sticky

Silver price corrects sharply from $25.00 as the US PCE price index remains sticky.
The US Dollar Index (DXY) holds gains around 103.60 as persistent PCE data offsets the impact of the softer labor demand.
Silver price is approaching the horizontal resistance plotted from July 20 high around $25.27

Sagar Dua FXStreet

Silver price (XAG/USD) faces selling pressure near the psychological resistance of $25.00 as the US Bureau of Labor Statistics reported that the Personal Consumption Expenditure (PCE) price index remained stubborn in July.

The monthly headline and core PCE grew at a stable pace of 0.2%. Also, the annual headline and core PCE accelerated marginally to 3.3% and 4.2% as expected by market participants.

Apart from that, the US Department of Labor reported weekly jobless claims data. For the week ending August 25, individuals claiming jobless benefits dropped to 228K vs. expectations of 235K and the former reading of 232K.

The US Dollar Index (DXY) holds gains around 103.60 and is looking to extend gains further as persistent PCE data offsets the impact of the softer labor demand reported by US Automatic Data Processing (ADP) for August, released on Wednesday.

After Fed’s preferred inflation measure, investors shift focus to the US Nonfarm Payrolls (NFP) data for August, which will be published on Friday at 12:30 GMT. As per the expectations, US labor formed witnessed a fresh addition of 170K payrolls, lower than July’s reading of 187K. The Unemployment Rate is seen unchanged at 3.5%. Apart from that, Average Hourly Earnings data will be keenly focused.

Silver technical analysis

Silver price is approaching the horizontal resistance plotted from July 20 high around $25.27 on a two-hour scale. Upward-sloping 50-period Exponential Moving Average (EMA) indicates that the upside momentum is extremely bullish.

The Relative Strength Index (RSI) (14) oscillates in the bullish range of 60.00-80.00, which indicates that the upside momentum is active.

Silver two-hour chart

XAG/USD

Overview
Today last price	24.58
Today Daily Change	-0.03
Today Daily Change %	-0.12
Today daily open	24.61

Trends
Daily SMA20	23.36
Daily SMA50	23.6
Daily SMA100	23.96
Daily SMA200	23.4

Levels
Previous Daily High	25.02
Previous Daily Low	24.53
Previous Weekly High	24.38
Previous Weekly Low	22.67
Previous Monthly High	25.27
Previous Monthly Low	22.52
Daily Fibonacci 38.2%	24.72
Daily Fibonacci 61.8%	24.83
Daily Pivot Point S1	24.42
Daily Pivot Point S2	24.24
Daily Pivot Point S3	23.94
Daily Pivot Point R1	24.91
Daily Pivot Point R2	25.2
Daily Pivot Point R3	25.39

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.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.