Silver Price Forecast: XAG/USD pierces the $23.00 figure after US CPI rose as expected

Silver (XAG/USD) rallies during the New York session, at press time trading at $23.03, up some 1.10%. The white-metal climb is courtesy of a hot US inflation reading, with the Consumer Price Index (CPI) increasing by 7.0% aligned with estimations, spurring a fall of US T-bond yields. 

The 10-year benchmark note is down one and a half basis points, sitting at 1.728%, a headwind for the greenback. In the meantime, the US Dollar Index, a measure of the buck’s value against a basket of six rivals, slides 0.43%, currently at 95.21.

Alongside the fall in nominal yields, the US 10 year TIPS, used as a proxy for real yields, which means nominal yields minus inflation, in the last five days dropped from -0.765% reached on January 7 to -0.838%.

US inflation in December increased above 7%

Before Wall Street opened, the US Bureau of Labor Statistics (BLS) featured the Consumer Price Index (CPI) for December, which came at 7.0%, as foreseen by analysts on its annual number. Additionally, the Core CPI figure, which excludes volatile items like food and energy prices, increased annually by 5.5%, higher than the 5.4% estimated by market participants.

XAG/USD Price Forecast: Technical outlook

In the overnight session, the white-metal seesawed around the 200-hour simple moving average (SMA), in fact, dipped below it to print a daily low at $22.65. Nevertheless, when the US CPI figures crossed the wires, silver rallied above $23.00 for the first time in five days.

However, the XAG/USD daily chart portrays the white metal as downward biased. The daily moving averages (DMAs) reside above the spot price. Worth noting, the upward move spurred by US economic data was capped 20-pips below the confluence of the 50 and the 100-DMAs around the $23.20-30 area, which would be the first resistance level on its way up. A breach of the latter would expose the $24.00 psychological level, that once broke, could send silver towards a nine-month-old bearish trendline, drawn from May 2021 cycle highs that pass near the $24.35 area.

Contrarily, silver bull’s first line of defense would be the psychological $23.00. A decisive break would exert downward pressure on the non-yielding metal, exposing the January 11 daily low at $22.44, followed by $22.00.