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Silver Price Forecast: XAGUSD eyes a break below the 50-DMA as US bond yields rally

  • Silver price is dropping close to 1.50% on Thursday.
  • July’s US CPI and PPI inflation reports show signs of topping; however, Fed officials remained hawkish.
  • Traders’ focus shifts toward the University of Michigan Consumer Sentiment and Inflation Expectations.

Silver price drops moderately as market sentiment remains upbeat following the release of the US inflation data on Wednesday, followed by Thursday’s PPI report, which showed prices are slowing down, painting a positive picture for the US Federal Reserve. Given the previously mentioned, traders reduced their exposure to safe-haven assets to the detriment of the white metal. At the time of writing, XAGUUSD is trading at $20.28, near the daily lows.

The Department of Labor revealed that prices paid by producers, also known as PPI, rose slower than estimated. The PPI for July jumped by 9.8%YoY, higher than the 10.4% estimates, while the so-called core CPI, which strips volatile items, increased 7.6% YoY, aligned with expectations. Adding the previously mentioned pieces of data to Wednesday’s release of US CPI, which is around 8.5%, still paints a picture of hot US inflation. Even though Fed policymakers welcomed the reports, they reiterated the Fed’s commitment to bringing inflation towards their 2% target.

On Wednesday, Minnesota Fed’s Kashkari said that although the CPI news was good, he said that the Fed is “far, far away from declaring victory.” He added that he hadn’t seen anything that changes the Fed’s path to 3.9% by year-end and the 4.4% by 2023. Kashkari also pushed back against the market’s rate cuts expectations early in the next year and said they are “not realistic.”

In the meantime, the US Dollar Index, a gauge of the greenback’s value, drops 0.10%, at 105.100, while the US 10-year bond yield rallies nine bps, up at 2.88%, weighing on the white metal prices.

What to watch

By Friday, the US economic calendar will feature the University of Michigan Consumer Sentiment alongside inflation expectations.

Silver (XAGUSD) Key Technical Levels

XAG/USD

Overview
Today last price20.28
Today Daily Change-0.30
Today Daily Change %-1.46
Today daily open20.59
 
Trends
Daily SMA2019.47
Daily SMA5020.3
Daily SMA10021.84
Daily SMA20022.75
 
Levels
Previous Daily High20.84
Previous Daily Low20.35
Previous Weekly High20.51
Previous Weekly Low19.55
Previous Monthly High20.37
Previous Monthly Low18.15
Daily Fibonacci 38.2%20.65
Daily Fibonacci 61.8%20.54
Daily Pivot Point S120.34
Daily Pivot Point S220.1
Daily Pivot Point S319.85
Daily Pivot Point R120.84
Daily Pivot Point R221.09
Daily Pivot Point R321.33

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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