On Monday, silver price extended Friday’s gains ahead of crucial US inflation data. The US dollar and the overall market sentiment continue to influence price movements among precious metals.
What’s driving the silver market?
Silver price was up by close to 2% on Monday although it remains on a downtrend. As is often the case, the dual-status metal moves inversely to the value of the US dollar. Late last week, the dollar index dropped to a six-week low at $101.96. While it has since rebounded, a weaker US dollar has made silver less pricey for buyers holding foreign currencies.
Even with the gains recorded over the past two sessions, silver price remains close to the three-month low hit late last week. This as the market continue to assess the likelihood of further rate hikes by the Fed. In fact, this risk-off mood is what yielded the metal’s largest weekly decline since October 2022.
Hawkish comments from several Fed officials and the subsequent uncertainty in financial markets may continue to curb silver price gains in the ensuing sessions. Investors now await further cues in the form of the PCE price index; the Fed’s preferred gauge of inflation. The data comes from businesses rather than consumers.
If the index further signals that inflation is easing, the markets may price in one more rate hike this year rather than two. If that happens, silver price may record additional gains.
Silver price prediction
Even with the gains reported over the past two sessions, silver price remains on a bearish trend. A look at its daily chart shows it still trading below the 25 and 50-day EMAs. Besides, the short-term 25-day EMA remains below the 50-day one; forming the bearish death cross pattern.
In the short term, the range between 22.10 and 22.85. Above the range’s upper border, it may find resistance at 23.15 as investors await further cues from the PCE price index.