By NewsBlogger Silver prices dropped to $24.10 following a high Consumer Price Index (CPI) report in February, leading to expectations of rising US Treasury yields and potential impacts on Federal Reserve interest rate decisions.
At a glance
- Silver prices dropped to $24.10 after high CPI numbers in February.
- Annual core CPI grew by 3.8%, exceeding expectations.
- Market analysts believe high inflation levels could impact the Fed’s interest rate decisions.
- The US Dollar Index rose above 103.00, influencing market expectations.
- Silver prices declined following a strong US inflation report, with potential support at $24.09.
The details
Silver prices dropped to $24.10 after the US Bureau of Labor Statistics reported high Consumer Price Index (CPI) numbers in February.
The annual core CPI grew by 3.8%, exceeding expectations but falling slightly below January’s figure.
Headline inflation also increased by 3.2% in February, surpassing expectations and the previous month’s numbers.
Market Analysis
Both monthly headline and core inflation saw a growth of 0.4%.
Market analysts believe the persistently high inflation levels could impact market expectations regarding the Federal Reserve, potentially reducing interest rates in June.
Yields on assets like US Treasury bonds are expected to rise, with 10-year US Treasury yields surging to 4.15%. Due to inflationary pressures, Federal Reserve policymakers will likely maintain a hawkish stance.
US Dollar Index
The US Dollar Index (DXY) rose above 103.00, as the market was influenced by expectations that the Federal Reserve would not consider reducing interest rates in the first half of 2024.
Despite facing selling pressure after testing horizontal resistance at $24.60, the overall trend for silver remains bullish.
However, a price correction is expected before a new upward movement.
The 20-day Exponential Moving Average (EMA) near $23.50 indicates positive near-term demand, while the 14-period Relative Strength Index (RSI) remains in the bullish range of 60.00-80.00, showing active bullish momentum.
During the North American session, Silver prices declined following a strong inflation report in the US, with rising US Treasury yields acting as a deterrent for the non-yielding metal.
XAG/USD dropped from its year-to-date highs of $24.68 to $24.10, marking a 1.48% decrease.
The pullback pushed prices toward the January 2 high, establishing support at $24.09. Further downside movement could lead to a breach of the $24.00 level, potentially extending losses to the January 12 high at $23.52. Conversely, if buyers maintain prices above $24.09, a range-bound trading scenario within the $24.00-$24.70 range is likely, with the next resistance levels at $25.00 and $25.91, last year’s high.
Gold prices have also hit a new high recently, and fluctuations are expected based on US Consumer Price Index (CPI) data.
ANZ Bank economists closely monitor the situation, while Commerzbank forecasts a potential setback in gold prices due to unforeseen inflation shocks.
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| fxstreet.com |
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| – Silver price (XAG/USD) drops to $24.10 after the United States Bureau of Labor Statistics reports that the Consumer Price Index (CPI) remains high in February – Annual core CPI grows at a higher pace of 3.8% in February, higher than expectations but lower than January – Headline inflation rises at a higher pace of 3.2% in February, higher than expectations and January – Monthly headline and core inflation both grow by 0.4% – A sticky inflation report is expected to impact market expectations for the Federal Reserve reducing interest rates in June – Yields on assets like US Treasury bonds are expected to increase, with 10-year US Treasury yields jumping to 4.15% – Fed policymakers may continue to maintain a hawkish narrative – The US Dollar Index (DXY) recovers above 103.00 on expectations that the Fed will not discuss reducing interest rates in the first half of 2024 – Silver price faces selling pressure after testing horizontal resistance at $24.60 – The overall trend for silver is still bullish, but a price correction is expected before a fresh upside move – The 20-day Exponential Moving Average (EMA) near $23.50 indicates upbeat near-term demand – The 14-period Relative Strength Index (RSI) is in the bullish range of 60.00-80.00, showing active bullish momentum |
| fxstreet.com |
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| – Silver price dropped late in the North American session following a hot inflation report in the United States – The rise in US Treasury yields was a headwind for the non-yielding metal – XAG/USD dropped from around year-to-date highs of $24.68 to $24.10, down 1.48% – Silver’s pullback dragged prices toward the January 2 high and turned support at $24.09 – If sellers retain control and push prices below $24.09, it would expose the $24.00 figure – XAG/USD could extend its losses toward the January 12 high at $23.52 if $24.00 is cleared – If buyers keep Silver’s spot prices above $24.09, range-bound trading within the $24.00-$24.70 area is expected – The next resistance would be the $25.00 figure, followed by last year’s high at $25.91 |
| fxstreet.com |
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| – Gold prices recently reached a new high – The US Consumer Price Index (CPI) will impact the price of gold – Economists at ANZ Bank are monitoring the situation closely – Commerzbank predicts a potential setback for gold prices due to inflation surprises |
