Silver Price Forecast: XAGUSD eyes a break below the 50-DMA as US bond yields rally

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Silver Price Forecast: XAGUSD eyes a break below the 50-DMA as US bond yields rally

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• Silver price is dropping close to 1.50% on Thursday.
• July’s US CPI and PPI inflation reports show signs of topping; however, Fed officials remained hawkish.
• Traders’ focus shifts toward the University of Michigan Consumer Sentiment and Inflation Expectations.

The pair currently trades last at 20.28.

The previous day high was 20.84 while the previous day low was 20.35. The daily 38.2% Fib levels comes at 20.65, expected to provide resistance. Similarly, the daily 61.8% fib level is at 20.54, expected to provide resistance.

Silver price drops moderately as market sentiment remains upbeat following the release of the US inflation data on Wednesday, followed by Thursday’s PPI report, which showed prices are slowing down, painting a positive picture for the US Federal Reserve. Given the previously mentioned, traders reduced their exposure to safe-haven assets to the detriment of the white metal. At the time of writing, XAGUUSD is trading at $20.28, near the daily lows.

The Department of Labor revealed that prices paid by producers, also known as PPI, rose slower than estimated. The PPI for July jumped by 9.8%YoY, higher than the 10.4% estimates, while the so-called core CPI, which strips volatile items, increased 7.6% YoY, aligned with expectations. Adding the previously mentioned pieces of data to Wednesday’s release of US CPI, which is around 8.5%, still paints a picture of hot US inflation. Even though Fed policymakers welcomed the reports, they reiterated the Fed’s commitment to bringing inflation towards their 2% target.

On Wednesday, Minnesota Fed’s Kashkari said that although the CPI news was good, he said that the Fed is “far, far away from declaring victory.” He added that he hadn’t seen anything that changes the Fed’s path to 3.9% by year-end and the 4.4% by 2023. Kashkari also pushed back against the market’s rate cuts expectations early in the next year and said they are “not realistic.”

In the meantime, the US Dollar Index, a gauge of the greenback’s value, drops 0.10%, at 105.100, while the US 10-year bond yield rallies nine bps, up at 2.88%, weighing on the white metal prices.

By Friday, the US economic calendar will feature the University of Michigan Consumer Sentiment alongside inflation expectations.

Technical Levels: Supports and Resistances

EURUSD currently trading at 20.28 at the time of writing. Pair opened at 20.59 and is trading with a change of -1.46 % .

The pair is trading above its 20 Daily moving average @ 19.47, below its 50 Daily moving average @ 20.3 , below its 100 Daily moving average @ 21.84 and below its 200 Daily moving average @ 22.75

The previous day high was 20.84 while the previous day low was 20.35. The daily 38.2% Fib levels comes at 20.65, expected to provide resistance. Similarly, the daily 61.8% fib level is at 20.54, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 20.34, 20.1, 19.85
• Pivot resistance is noted at 20.84, 21.09, 21.33

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