Silver Holds Near Highs as Traders Await US CPI Signals

Key Moments

Range-Bound Trade Ahead of US CPI Release

Silver prices (XAG/USD) are moving sideways around $63.50 in the Asian session at the start of the week, with the metal struggling to establish a clear direction. Prices remain close to Friday’s peak of $65.16, which marked an almost seven-week high.

Market attention is focused on the upcoming release of the United States Consumer Price Index (CPI) for July, scheduled for Wednesday. The data is anticipated to inject additional volatility into bullion markets, including silver.

Fed Policy Expectations in Focus

The July Federal Reserve monetary policy statement indicated that officials remain strongly focused on elevated inflation and reaffirmed their commitment to bringing price growth back to the 2% target. As a result, the July CPI figures are expected to play a key role in shaping expectations for the next steps in Fed policy.

Stronger-than-expected inflation would increase the perceived risk of additional interest rate hikes by the Fed, a development that typically weighs on non-yielding assets such as silver.

Labor Market Data Tempers Hawkish Bets

Silver rallied sharply on Friday after US July Nonfarm Payrolls (NFP) data prompted traders to cut back on expectations for a more aggressive Fed stance at the September policy meeting. The labor market report indicated a contraction in the overall workforce, prompting a reassessment of the outlook for interest rates.

According to the CME FedWatch tool, the probability of a rate increase at the September meeting currently stands at 46%, down from 67% a week earlier.

The latest NFP report showed that employers cut 23K jobs, compared with expectations for an increase of 80K positions. In addition, the June NFP reading was revised down to 20K from the previously reported 57K.

Silver Technical Picture: Key Levels and Bias

XAG/USD is trading near $63.50 and is maintaining a bullish short-term bias while spot prices stay above the 20-day Exponential Moving Average (EMA), which is currently at $60.14. The pair has staged a strong rebound from recent lows and continues to trade above this important dynamic support area.

The Relative Strength Index (RSI) stands at 59.28, indicating improving momentum that has not yet reached overbought territory.

On the upside, the first significant barrier is the prior week’s peak at $65.16. A sustained break above that level would expose further gains, with $70.00 as the next notable upside objective. On the downside, the 20-day EMA at $60.14 is acting as primary support. A decisive move below this dynamic level could leave silver vulnerable to a retest of its Year-To-Date low at $54.77.