Silver price began the new week on its back foot ahead of the US inflation data and Fed meeting minutes. As at the time of writing, it was trading at $19.66; its lowest level since 3rd October.
Notably, the dual-status metal has dropped by close to 15% since the beginning of the year. More recently, it has been in the red for four consecutive sessions and will likely record further losses over the course of the week.
Fundamentals
After bouncing back above the critical level of $20 in the past week, silver price is back below the aforementioned zone; continuing the bearish trend that has been persistent since mid-April. Notably, the environment of high interest rates is the main bearish driver for the financial asset.
Indeed, this week will likely yield high volatility in silver price as traders digest the US inflation data and Fed meeting minutes. Economists expect the US consumer prices to have increased at a lower pace of 8.1% in September compared to the prior month’s 8.3%. With the exclusion of the volatile food and energy prices, core CPI is expected to have risen to 6.5% from 6.3%.
High inflation has pushed the Federal Reserve to aggressive interest rate hikes; an aspect that has been weighing on silver price and the broader class of precious metals. This year, the central bank has hiked rates by 300 basis points and is expected to make further increases in coming weeks.
Additionally, silver price will be reacting to Chinese economic data, seeing that the country is the leading consumer of industrial metals and the second largest economy in the world. China’s CPI figures are set for release on Thursday.
Silver price prediction
On its daily chart, silver price is trading above the 25 and 50-day EMAs despite the recorded losses. In the short term, I expect it to record subtle movements ahead of the week’s crucial economic events. With that in mind, the range between 20.05 and 19.57 will be worth watching.
Even with a probable rebound, I expect it to remain below the upper level of 20.34. On the flip side, higher-than-expected CPI numbers may push silver price lower as the bulls defend the critical support zone of 19.00.
