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Silver Price Forecast: XAGUSD rises near $19.20 on a soft US dollar, as recession fears increase

  • Silver Price shows signs of bottoming as the US 2s-10s yield curve inversion deepens further towards negative territory.
  • Gold and Silver prices stage a recovery after reaching YTD lows in the last couple of days.
  • Richmond’s Fed Thomas Barkin commented that the high CPI print makes the case to fight inflation even harder.

Silver  (XAGUSD) advances sharply, approaching weekly highs near $19.36 on Wednesday, after tumbling below $19.00 in the early New York session in the release of higher than estimated US inflation data sparked an upward reaction in US Treasury yields, a headwind for XAGUSD prices. However, as the New York session progressed, the white metal recovered some ground and is trading around $19.17.

Recession fears increase, and traders begin to seek safety in precious metals

Risk-aversion is the game’s name, but precious metals appear to have found a bottom. Worries about recession had increased substantially amongst investors, as shown by the US 2s-10s yield curve inversion for the last seventh days, at -0.236%, levels last seen since 2001s. In the meantime, the greenback remains weak, but stages a comeback, as shown by the US Dollar Index losing 0.16%, at 107.995, a tailwind for the silver price.

Also read: AUD/USD climbs above 0.6750s after hot US CPI on a weak US dollar

Before Wall Street opened, the US Bureau of Labor Statistics reported that prices paid by consumers rose the most since 1981, by 9.1% YoY, higher than the 8.8% expected and topping the 8.6% May reading. Meanwhile, inflation excluding volatile items like food and energy, the so-called core CPI, expanded at a rate of 5.9% YoY, less than the previous number, but above estimations of 5.7%, further cementing the case for the Fed 75 bps rate hike.

With US inflation data in the rearview mirror, STIRs money market futures have begun to price in an 84% chance that the Federal Reserve would hike 100 bps while fully pricing a 75 bps increase.

Of late in the New York session, Richmond’s Fed President Thomas Barkin, in an interview with the Wall Street Journal (WSJ), said the high CPI print “makes the case even stronger to continue to be resolute to fight inflation” when asked if he would favor a 100 bps rate hike. Barkin added that the size of the hike “is not nearly as important to me as the destination, which is, where do you want to take forward-looking real rates?”

What to watch

Data-wise, on Thursday, the US economic calendar will feature Initial Jobless Claims, inflation on the producer side, and Fed speakers will update the status of the US economy.

Silver (XAGUSD) Key Technical levels

XAG/USD

Overview
Today last price19.17
Today Daily Change0.29
Today Daily Change %1.53
Today daily open18.93
 
Trends
Daily SMA2020.5
Daily SMA5021.29
Daily SMA10023.04
Daily SMA20023.17
 
Levels
Previous Daily High19.2
Previous Daily Low18.75
Previous Weekly High20.2
Previous Weekly Low18.92
Previous Monthly High22.52
Previous Monthly Low20.22
Daily Fibonacci 38.2%18.92
Daily Fibonacci 61.8%19.03
Daily Pivot Point S118.72
Daily Pivot Point S218.51
Daily Pivot Point S318.26
Daily Pivot Point R119.18
Daily Pivot Point R219.42
Daily Pivot Point R319.63

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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