Silver Price: Implications of the US Inflation Numbers

Silver price is on a decline as investors digest Wednesday’s US inflation data. According to the US Bureau of Labor Statistics, April’s consumer prices rose the highest in over a decade. CPI rose by 0.8% compared to the expected 0.2% MoM. As investors await US PPI and retail sales on Thursday and Friday respectively, inflation concerns are mounting. While the Fed is of the opinion that the expected inflation will be transitory, investors are concerned about the possible overheating of the US economy.

The rallying of US treasury yields has further exerted pressure on silver price. On Thursday, the 10-year yields were at a one-month high of 1.70 before pulling back to the current 1.68.

XAGUSD Technical Outlook

Silver price is trading lower as a reaction to the US consumer price data released on Wednesday. At the time of writing, the precious metal was down by 0.23% at 26.95. This is a decline from Wednesday’s intraday high of 27.71.

On a daily chart, silver price is above the 25 and 50-day exponential moving averages. While it is on a decline, it is still within the ascending channel. Notably, Wednesday’s intraday high was along the channel’s upper border while Thursday’s intraday low is along the lower border.

As investors await the US PPI data later in the day, I expect silver price to find some resistance along the 25-day EMA at 27.23. Even if it manages to push past that level, the bulls may not gather enough momentum to move the price past 27.50. On the lower side, it could move past the channel’s lower border to find support at 26.50.

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