Silver Prices Rally Amid Hot Inflation Data and Ukraine Uncertainty

Key Insights 

• Silver prices extend gains as a hedge against inflation. 
• Benchmark yields slid as investors surged amid a potential inflation peak.
• Oil prices rose amid the easing of China shutdown restrictions.

Silver prices surged higher for the fifth consecutive day following hotter inflation data than expected. Benchmark yields eased after the latest data was released. Hawkish Fed policy has been priced into the market, limiting the dollar’s gains. 

The March CPI rose 8.5% from a year ago, the greatest annual gain since 1981. The reading was slightly above the Dow Jones estimate of 8.4%. However, core inflation, excluding food and energy, rose 6.5% year over year. Core PCI rose 0.3%, less than the 0.5% estimate. 

Despite this, real earnings are not keeping up with the cost of living. This could lead to increasing inflation pressures. The report is critical for how aggressively the Fed will raise rates and taper its bond purchases.

Technical Analysis

Silver prices rallied 1.2% today, confirming an uptrend for the precious metal. Silver prices face downward selling pressure as the US dollar and yields strengthen. Support is seen near $24.76. Resistance is near the March 24th high, near $25.845. A break higher would test the $26.00 level.

Short-term momentum is positive as the fast stochastic had a crossover buy signal.

The medium-term momentum turns positive as the histogram prints positively with the MACD (moving average convergence divergence). The trajectory of the MACD histogram is in positive territory, which reflects the upward trend in price movement.