- Silver prices tumbled on higher-than-estimated August inflation figures, cementing the case for a third-straight Fed 75 bps rate hike.
- US CPI headline unexpectedly rose by 8.3 YoY, higher than 8.1% estimates.
- The CME FedWatch Tool has fully priced in a 75 bps rate hike.
Silver price drops from weekly highs near the $20.00 figure due to high US inflation data reported by the Department of Labor, exceeding analysts’ estimates, with most expecting a dip that could deter the US Fed from hiking interest rates.
XAG/USD opened around the $19.70s area and climbed towards its daily high at $19,94, ahead of the release of US inflation. However, once the headline crossed newswires, the pair tumbled toward the daily low at $19,34 before settling around the current spot price. XAG/USD is trading at $19.52, below its opening price.
XAG/USD tumbled on an unexpected rise in US inflation
Before Wall Street opened, the US Labor Department released that August inflation in the US i, hit the 8.3% YoY mark, lower than the 8.5% in the previous month. Even though it’s a positive number, economists were expecting a lower reading, spurred by lower energy prices, with WTI oil prices peaking at around $129.43 around March of 2022.
Inflation, excluding volatile items like food and energy, continued its uptrend, from 5.9% YoY in July to 6.3%, mainly caused by higher rent costs, further cementing the case for a large rate hike by the US Federal Reserve.
Elsewhere, the US Dollar Index, a gauge of the greenback’s value vs. six peers, is recovering a lot of ground, after tumbling towards a daily low at 107.660, edges up almost 1% at 109.375, a headwind for the precious metals complex.
The US 10-year T-bond yield edged up seven bps, at 3.431%, while US 10-year Treasury Inflation-Protected Securities yield cleared the 1% threshold for the first time since January 2019.
The US Federal Reserve entered its blackout period until the September 21 monetary policy decision. Market participants have fully priced in a 75 bps rate hike, according to the CME FedWatch Tools, which would see the Federal Funds Rate (FFR) reach the 3.25% threshold.
What to watch
The US economic docket will feature prices paid by producers on Wednesday, followed by the New York Fed PMI, the Philadelphia Fed PMI, Initial Jobless Claims, and Retail Sales on Thursday. On Friday, the University of Michigan (UoM) will release the US Consumer Confidence ahead of next’s weeks FOMC monetary policy decision.
Silver Key Technical Levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.