- 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
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 stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.