- Silver remains below $28.00 as expectations for a significant Fed rate cut decline.
- US headline and core inflation fell by a tenth in July to 2.9% and 3.2%, respectively.
- The next factor to impact the silver price will be the monthly US retail sales data scheduled for Thursday.
Silver (XAG/USD) is trading subdued around the $28.00 mark in New York on Wednesday. The white metal is under pressure as market expectations of the Federal Reserve (Fed) announcing a substantial interest rate cut in September have cooled following the release of the United States (US) Consumer Price Index (CPI) report for July.
The probability of a 50 basis point (bps) cut in key interest rates fell to 41.5% from 54% in September after the inflation report, according to the CME FedWatch tool. Still, the data provides a clear signal that the Fed will cut rates next month.
The CPI report showed that annual core and headline inflation, which excludes volatile items such as food and energy, fell by a tenth to 2.9% and 3.2%, respectively. The decline in price pressures was broadly in line with market consensus. Monthly headline and headline inflation also rose 0.2%, in line with expectations.
Meanwhile, the U.S. dollar (USD) fell further as inflation data strengthened investors’ belief that price pressures would return to the coveted 2% level. The U.S. Dollar Index (DXY), which tracks the greenback’s value against six major currencies, hit a recent weekly low of 103.30.
The next factor to impact the silver price will be the monthly US retail sales data for July, which will be released on Thursday.
Silver Technical Forecast
Silver price continues to hold below the 20-day exponential moving average (EMA) near $28.20, suggesting that the short-term trend is bearish. While the 200-day EMA near $26.90 continues to provide support for silver bulls.
The main shock absorber for the silver price will be the horizontal support set from May 5, where the price is $26.14.
The 14-day Relative Strength Index (RSI) remains around 40.00. A decisive break below this level will trigger a downward trend.
