Key Moments
- XAG/USD is trading slightly lower near $67.90 in Tuesday’s European session ahead of the May U.S. CPI release.
- Consensus forecasts point to headline CPI accelerating to 4.2% YoY and core CPI rising 2.9% YoY in May.
- Stronger-than-expected May NFP has fueled expectations of at least one Federal Reserve rate hike this year, weighing on non-yielding Silver.
Silver Eases as Markets Await U.S. CPI
Silver (XAG/USD) is trading with a softer tone around $67.90 during the European session on Tuesday, as market participants scale back risk exposure in front of the United States Consumer Price Index (CPI) report for May, scheduled for release on Wednesday.
Modest selling pressure has emerged in the white metal as investors look to the inflation data for clearer guidance on the Federal Reserve’s next policy steps.
Inflation Expectations and Fed Policy Outlook
Current projections suggest that headline U.S. CPI increased to 4.2% year-on-year in May, up from 3.8% in April. Over the same period, core CPI – which excludes food and energy – is expected to have grown at an annual rate of 2.9%, compared with 2.8% previously.
On a month-on-month basis, estimates point to a 0.5% rise in headline CPI and a 0.3% increase in core CPI.
Investors are closely monitoring these figures for signals on the Federal Reserve’s monetary policy stance. While precious metals often benefit in periods of elevated inflation, a shift toward more hawkish Fed expectations tends to be negative for non-interest-bearing assets such as Silver.
Hawkish expectations for the Fed have strengthened over the last two sessions following the release of unexpectedly robust Nonfarm Payrolls (NFP) data for May. According to the CME FedWatch tool, markets currently assign nearly a 71% probability that the Fed will implement at least one rate hike this year.
Technical Picture: Bearish Bias Persists
XAG/USD remains under pressure near $67.90, extending its corrective move and trading comfortably below the 20-day Exponential Moving Average (EMA) at $73.97. This positioning underscores a bearish near-term outlook, with the 20-day EMA acting as the primary dynamic resistance.
The Relative Strength Index (RSI) sits at 35.83, hovering near oversold territory. This suggests that while downward momentum is still present, the intensity of selling could begin to ease as the move matures.
| Technical Level | Value | Implication |
|---|---|---|
| Spot price (XAG/USD) | $67.90 (approx.) | Extending corrective decline |
| 20-day EMA | $73.97 | Key dynamic resistance; below it keeps bearish bias |
| RSI | 35.83 | Near oversold, suggesting potential slowdown in selling |
| Upside target on break above 20-day EMA | $80.00 | Room for deeper recovery if daily close clears EMA |
| Downside reference level | $61.61 (March 23 low) | Potential support if selling resumes |
On the upside, immediate resistance is located around the 20-day EMA near $73.97. A daily close above this level would be required to temper the prevailing bearish tone and open the door to a more meaningful recovery toward the $80 area. On the downside, a continuation of the decline could take prices toward the March 23 trough at $61.61.
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