Silver (XAG) Daily Forecast: Prices Surge to $31.45 on Easing Inflation Data

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Published: Jul 12, 2024, 06:30 GMT+00:00

Key Points:

Silver prices surged to an intraday high of $31.45 on softer US CPI data.
Decline in consumer prices for June renews rate cut hopes, weakening the US dollar.
Upcoming US economic releases, including PPI and Consumer Sentiment, may impact silver prices.

Silver (XAG) Daily Forecast: Prices Surge to $31.45 on Easing Inflation Data

Market Overview

Silver prices continued their rally, reaching an intraday high of $31.4585. This surge was supported by softer US CPI data, raising expectations of potential Fed rate cuts in 2024.

The US Bureau of Labor Statistics reported a decline in consumer prices for June, renewing optimism for future rate cuts and exerting downward pressure on the US dollar. These factors drove gains in silver prices.

Looking ahead, market participants will closely monitor upcoming US economic releases, including the June Producer Price Index (PPI) and the University of Michigan Consumer Sentiment survey. These reports are expected to provide further insights into economic conditions and potentially impact silver prices.

Silver Prices Strengthen on Easing Inflation and Fed Rate Cut Expectations

The US dollar extended its decline as the latest Consumer Price Index (CPI) data revealed easing inflation in June. Excluding volatile items such as food and energy, the core CPI also showed a decline, renewing expectations that the Federal Reserve may consider interest rate cuts in 2024.

According to the CME FedWatch Tool, there is now an 85% probability of a quarter-point rate cut in September, up from 70%, reflecting growing market sentiment towards potential monetary policy adjustments. Furthermore, robust labour market data, highlighted by a decrease in unemployment benefits filings, suggests continued economic strength amid declining inflation.

June’s US CPI unexpectedly fell by 0.1% from the previous month, missing expectations of a 0.1% increase. Core CPI, which excludes volatile food and energy prices, saw a slight decrease, moving from a 0.2% rise in May to a 0.1% increase in June, in line with forecasts. Year-over-year, headline inflation dropped to 3% in June from 3.3% in May, while core inflation declined to 3.3% from 3.4%, both falling short of projections.

Initial Jobless Claims for the week ending July 6 were 222,000, lower than the consensus estimate of 236,000 and the previous week’s 239,000 claims.

Easing inflation and potential Fed rate cuts have bolstered silver prices. A weaker US dollar and economic strength signal favourable conditions for precious metals amid lower interest rate expectations.

Short-Term Forecast

Silver prices are expected to remain volatile. Buy above $31.12, targeting $31.46, $31.77, and $32.06. Watch for selling pressure below $31.12.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver – Chart

The price of Silver is currently at $31.22, down 0.71%. On the 2-hour chart, the pivot point is at $31.12. Immediate resistance levels are $31.46, $31.77, and $32.06. Support levels are $30.88, $30.65, and $30.43.

Technical indicators show the 50-day Exponential Moving Average (EMA) at $30.96 and the 200-day EMA at $30.27. The outlook remains bullish above $31.12. However, a break below this level could trigger significant selling pressure.

About the Author

Arslan Aliauthor

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.