Silver price had been on a rebound for four consecutive sessions. Indeed, it hit an intraday high of $20.01 on Monday as a reaction to the decline in the US dollar. However, the higher-than-expected CPI figures erased some of the previous gains. As at the time of writing, it was at $19.44; down by 1.77%.
Fundamentals
Data released by the US Labor Department on Tuesday dashed investors’ hopes that US inflation had peaked. Consumer prices rose by 8.3% from a year earlier;beating the economists’ forecast of 8.1%. The slight decline from the July’s 8.5% is attributed to the recent drop in gasoline prices.
Without the volatile food and energy components, the core CPI increased by 0.6% from the previous month and 6.3% from the year earlier. Notably, it was the first increase in six months.
The inflation data further points to the expected super-sized interest rate hike of 75 basis points in Fed’s September policy meeting. With price pressures still elevated, the central bank may remain ultra-hawkish in subsequent meetings. As is the case with other risk assets, silver price has been under pressure from the high interest rates while the environment boosts the US dollar.
Besides, slow economic growth in major economies and the globe at large have heightened concerns over the metal’s industrial demand. Based on these bearish factors, the precious metal will likely remain on a downtrend in the short term.
Silver price prediction
As seen on its daily chart, silver price was hovering around the 50-day EMA while holding steady above the 25-day EMA. Based on both the fundamental and technical indicators, I expect the precious metal to remain below the crucial level of $20.00 in the short term. Indeed, a move above this level will invalidate this bearish thesis.
In particular, the range between $20.03 and the 50-day EMA at $19.45 will be worth watching. Past the range’s lower border, the bears will have an opportunity to push it lower to $18.90.
