Silver prices hovered near a five-week high on Thursday, as traders weighed inflation data and awaited upcoming U.S. Producer Price Index (PPI) figures and Federal Reserve policy signals. Earlier in the session, silver saw a pullback after failing to sustain momentum above a 50% retracement level at $32.26, but technical support at the 50-day moving average of $31.72 remains intact.
At 12:42 GMT, XAG/USD is trading $31.80, down $0.11 or -0.35%.
Silver briefly tested $32.26, but rejection at this level highlighted resistance from Fibonacci barriers at $32.87. A breach above $32.26 could set up a further rally, while failure to hold the $31.72 support risks declines to $31.29 or $30.59. These technical levels are pivotal, as traders look to the U.S. PPI data for clues on short-term direction.
The November Consumer Price Index (CPI), reported Wednesday, showed a 0.3% monthly rise, matching the largest gain since April. Core inflation stood at 3.3% annually, aligning with expectations. This data, combined with earlier Federal Reserve guidance, has fueled a 98% probability of a 25-basis-point rate cut at the upcoming policy meeting, according to CME’s FedWatch tool.
Traders are hoping today’s PPI print is silver friendly and provide a tailwind for an upside breakout. Lower rates often benefit silver, which thrives in low-yield environments.
The PPI report, due Thursday morning, is expected to show a 0.2% month-over-month increase, with core PPI anticipated at 3.2% year-over-year. Jobless claims data, forecast at 221,000, will also be released, potentially shaping market sentiment further.
Broader geopolitical and economic developments, including ECB rate decisions and ceasefire discussions in Gaza, remain on the radar for bullion investors. While safe-haven demand has softened slightly amid lower U.S. Treasury yields and higher risk appetite, geopolitical uncertainty continues to provide underlying support.
Silver’s short-term outlook depends on PPI data and the Fed’s final rate decision for the year. A bullish breakout above $32.26 could spur further gains, targeting $32.87. Conversely, a drop below $31.72 would signal bearish momentum, potentially driving prices to $30.59. With the Fed’s easing cycle widely expected to continue, silver is likely to find support in the broader macroeconomic environment.
More Information in our Economic Calendar.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.