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Silver Price Forecast: XAG/USD tumbles to $23.10s on overall US Dollar strength

  • An appreciation of the US Dollar weighs on Silver prices.
  • The robust US Producer Price Index report confirms that inflation is stickier than estimated.
  • Consumer Sentiment in the United States improved last week while inflation expectations eased.
  • Rising US Treasury bond yields undermine the XAG/USD value.

Silver price retraces from daily highs of $23.53 reached in the European session and tumbles toward $23.17, courtesy of a sudden change in market mood, with US Treasury yields trimming its earlier losses, while the US Dollar (USD), shifted positively. Therefore, the XAG/USD is trading at $23.16, below its opening price by 1.31%.

US equities remain buoyed amidst an upbeat sentiment, trading in the green. Last week’s economic data from the Department of Labor, with the Producer Price Index (PPI), not only rose 0.3% MoM for three consecutive months but also outpaced expectations on an annual base, up 7.4% YoY and 6.2% YoY, excluding food and energy prices. During the day, the University of Michigan (UoM) Consumer sentiment improved to 59.1 from 56.8 last month, the data showed Friday. Delving into the report, inflation expectations dropped from 4.9% to 4.6% in the one-year horizon.

Tuesday’s release of the US Consumer Price Index (CPI) could be a catalyst in determining the performance of the precious metal segment and the US Dollar. It is anticipated that CPI will have decreased, with YoY readings expected to drop from 7.7% to an estimated 7.3%, while core CPI has been predicted to fall slightly from 6.3% to 6%. If findings indicate cooling inflation conditions, it may result in the US Dollar weakening further, which would underpin the white metal.

In the meantime, the US Dollar Index (DXY), a gauge of the buck’s value against a basket of six currencies, is gaining 0.14%, back above the 105.000 threshold, while the US 10-year benchmark note is yielding 3.586%, slightly tilted to the upside, by one bps.

Therefore, the XAG/USD would likely keep downward pressured ahead of the US inflation report. A hotter-than-expected CPI data could pave the way to prolong rate hikes by the Federal Reserve, meaning the US Dollar would strengthen, to the detriment of the precious metals segment.

Silver Key Technical Levels

XAG/USD

Overview
Today last price23.18
Today Daily Change-0.24
Today Daily Change %-1.02
Today daily open23.42
 
Trends
Daily SMA2021.86
Daily SMA5020.62
Daily SMA10019.96
Daily SMA20021.26
 
Levels
Previous Daily High23.69
Previous Daily Low22.96
Previous Weekly High23.69
Previous Weekly Low22.03
Previous Monthly High22.25
Previous Monthly Low18.84
Daily Fibonacci 38.2%23.41
Daily Fibonacci 61.8%23.24
Daily Pivot Point S123.02
Daily Pivot Point S222.63
Daily Pivot Point S322.3
Daily Pivot Point R123.75
Daily Pivot Point R224.08
Daily Pivot Point R324.48

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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