Silver Drops as Market Awaits PCE Data & Jackson Hole

Key Moments

Macro Focus: PCE Data and Fed Outlook

Silver prices are under pressure, with XAG/USD down 1.6% to near $67.87 in Asian trading on Tuesday, as market participants scale back risk ahead of key United States Personal Consumer Expenditure Price Index (PCE) figures for July, due on Wednesday.

Traders are especially focused on the core PCE reading, which is described as the Federal Reserve’s preferred inflation gauge, for clues on the future direction of monetary policy.

TD Securities Expectations for July Inflation

According to TD Securities, July’s inflation profile is expected to leave the Fed’s favored measure broadly consistent with its policy goals. Analysts there note that “core PCE inflation is expected to hit the Fed’s strike zone for a second consecutive report in July, despite picking up to 0.24% m/m.” They further project that “headline prices likely rose by a tamer 0.15%,” and emphasize that “more importantly, we expect the market-based core PCE to stay contained at 0.13% m/m.”

On the activity front, TD points out that “weak retail sales data point to slowing in consumer spending to 0.2% m/m in July and a softer 0.1% in real terms,” and adds that “we look for gradual disinflation to resume in 2027.”

Referencing the FX Economic Calendar, the article notes that annualized core PCE inflation is forecast to have increased at an unchanged pace of 3.4%.

Stronger-than-expected inflation could reignite concerns about potential interest rate hikes by the Federal Reserve. That backdrop is typically unfavorable for non-yielding assets such as Silver.

Jackson Hole in Focus: Fed Communication Watch

Beyond the PCE release, the other key event for Silver traders this week is the Jackson Hole Symposium. Market attention is centered on Fed Chair Kevin Warsh’s scheduled remarks on Thursday.

Warsh “is known to avoid providing “forward guidance” on interest rates, but will likely warn of upside inflation risks.” Any perceived shift in tone or emphasis on inflation risks could influence expectations for policy and, by extension, precious metals.

Technical Picture for XAG/USD

XAG/USD is trading near $67.87 and still reflects a constructive near-term technical setup, as price remains clearly above the 20-day exponential moving average (EMA) at $64.64.

The Relative Strength Index (RSI) is around 61.7, remaining in positive territory and indicating that bullish momentum is intact despite the current consolidation phase.

On the downside, the area around $64.64, where the 20-day EMA is located, is highlighted as the first important support zone. Any deeper retreat is likely to be perceived as a corrective move as long as price stays above this moving average.

On the upside, a break above the August 21 peak near $70 is seen as necessary for the bullish trend to continue toward the June 15 high at $71.33 and then the June high at $77.00.