Spot Silver slips from 14-week high ahead of US CPI test

Spot Silver edged lower on Tuesday, while holding not far from last Friday’s 14-week peak of $24.636, as market players awaited the key US CPI report that may provide further clues on the timing of the Federal Reserve’s first rate cut.

Annual headline consumer inflation in the United States probably remained steady at 3.1% in February, according to market consensus.

Annual core CPI inflation probably eased to 3.7% in February from 3.9% in January – a 2 1/2-year low.

“Progress in U.S. inflation has somewhat stalled in the January’s read, but follow-up comments from policymakers seem to suggest that they are willing to look beyond it as a one-off. Another surprise run of hotter-than-expected inflation data for February will likely challenge that,” IG market strategist Yeap Jun Rong was quoted as saying by Reuters.

Markets are pricing in three to four 25 basis point Fed rate cuts this year, with the chance of the first cut taking place in June at 70%, according to LSEG’s interest rate probability app.

Lower interest rates tend to decrease the opportunity cost of holding Silver, which pays no interest.

As of 7:36 GMT on Tuesday Spot Silver was edging down 0.25% to trade at $24.408 per troy ounce.

Silver Futures for delivery in May were edging down 0.42% to trade at $24.610 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was inching down 0.03% to 102.815 on Tuesday. The DXY has rebounded from an eight-week low of 102.358.