Key Takeaways:
- Silver price remains steady near $29.50 as US PCE inflation data for July is anticipated.
- Economists expect core PCE inflation to have accelerated to 2.7% in July.
- The Fed is likely to begin reducing interest rates from September.
Silver Price Holds Steady Near $29.50 as US Inflation Data Awaited
Silver price (XAG/USD) is trading within a narrow range near $29.50 in the European session on Friday. The white metal is consolidating as investors await the release of United States (US) Personal Consumption Expenditure inflation (PCE) data for July, scheduled for 12:30 GMT.
US Core PCE Inflation Expected to Accelerate
Economists predict that the annual core PCE inflation, excluding volatile food and energy prices, increased to 2.7% in July from June’s 2.6%. Monthly figures are projected to have risen steadily by 0.2%. The inflation data will play a crucial role in speculation surrounding the size of the anticipated interest rate cut by the Federal Reserve.
Fed Likely to Begin Interest Rate Reduction from September
The Fed is widely expected to start reducing interest rates in September. The CME FedWatch tool indicates a 33% probability of a 50-basis points rate cut, while the remaining favors a 25 bps reduction.
Market Indicators
Ahead of the US inflation data, 10-year US Treasury yields have dipped to 3.86%. The US Dollar Index (DXY) is trading near 101.50. The US Dollar continues its recovery from Thursday, supported by better-than-expected Q2 GDP growth of 3% on an annualized basis.
Silver Technical Analysis
Silver price remains range-bound near $29.50, finding support from the 20-day Exponential Moving Average around $29.00. The major resistance for bull runs is at the August 26 high of $30.20. The 14-day RSI indicates market indecisiveness.
FAQs About Silver
What is Silver?
Silver is a precious metal with historical significance as a store of value and medium of exchange. Investors often turn to Silver for portfolio diversification, intrinsic value, or as a hedge against inflation. It can be purchased physically or traded through ETFs on global markets.
What Factors Influence Silver Prices?
Silver prices can be affected by geopolitical instability, recessions, interest rates, USD performance, investment demand, mining supply, recycling rates, and economic dynamics in the US, China, and India.
How Does Silver Relate to Gold?
Silver prices often mirror Gold price movements due to their safe-haven status. The Gold/Silver ratio may indicate relative valuation between the two metals, with a high ratio suggesting undervaluation of Silver and vice versa.
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