The Silver price (XAG/USD) is under pressure in the American session on Tuesday, even though the US producer inflation remained soft in July. The core Producer Price Inflation (PPI) in the US, which excludes volatile food and energy prices, remained flat month-on-month. Annually, the underlying PPI decelerated to 2.4% from expectations of 2.7%, signaling a moderation in price pressures.
Investors are now more confident that inflation is on a path towards the 2% target set by banks, leading to expectations of a significant interest rate cut by the Federal Reserve in September. This has weakened the US Dollar and bond yields, with the US Dollar Index falling below the critical support level of 103.00 and 10-year US Treasury Yields dropping to around 3.87%.
While lower yields typically benefit non-yielding assets like Silver, the Silver price has also declined as investors await further evidence of inflation returning to the desired rate. The upcoming US Consumer Price Index (CPI) data for July, expected to show a rise in monthly headline and core inflation by 0.2%, will be closely watched.
Geopolitical tensions in the Middle East, particularly concerns about a potential conflict between Iran and Israel following the killing of a Hamas leader in Tehran, are also supporting the Silver price and limiting its downside.
Silver Technical Forecast
The Silver price has found interim support near the 200-day Exponential Moving Average (EMA) at $26.90, indicating an uncertain overall trend. The major support level remains at $26.14, based on the horizontal support plotted from the high on May 5.
The 14-day Relative Strength Index (RSI) is hovering around 40.00, with a break below this level likely to trigger bearish momentum.
Silver Daily Chart
Silver FAQs
Silver is a precious metal that is highly traded among investors, offering a store of value and a potential hedge during high-inflation periods. It can be bought physically or traded through Exchange Traded Funds to diversify investment portfolios.
Factors such as geopolitical instability, interest rates, US Dollar behavior, investment demand, and industrial usage can influence Silver prices. It tends to follow Gold’s movements and is widely used in sectors like electronics and solar energy.
Understanding these factors and keeping an eye on key economic indicators can help investors make informed decisions regarding Silver investments.