Silver Price Analysis: XAG/USD Rise Above $29.00 on Faint US PCE

Silver price increased by 0.49, supported by lower US inflation data and the prospect of a Fed rate cut.
Technical analysis shows bearish trends; The RSI indicates selling pressure at lower highs and lower lows.
Resistance Levels: $29.19 (50-DMA), $31.54 (June 7 High), $32.00, $32.51 (YTD High).
Support Points: $29.00, $28.28 (June 10, 2021 high), $28.00, $27.01 (May 8 low), $26.82 (100-DMA).

Silver price rose 0.49% as inflation data released by the US Bureau of Economic Analysis (BEA) fell in line with expectations, fueling investors’ hopes of a Fed rate cut. The Greenback was therefore slightly lower, while XAG/USD was trading at $29.13 after hitting an intraday low of $28.78.

XAG/USD Price Analysis: Technical Outlook

After forming a quasi-double top, silver has deepened its losses, which amounted to over 10% after peaking around $32.51 on May 20. The uptrend seems to be exhausted, as evidenced by various signals: the momentum has turned bearish with the relative strength index rising. The Strength Index (RSI) has entered sellers’ territory, and a series of lower highs and lower lows confirm the trend change.

If buyers want to regain control, they need to break through the 50-day moving average (DMA) at $29.19. Once above that hurdle, the next level will be the June 7 high at $31.54. A break through that would allow for a move to $32.00 before challenging the yearly high of $32.51.

Conversely, on a path of least resistance, if XAG/USD breaks below $29.00, it could see the June 10, 2021 support at $28.28 come into play before exposing the psychological $28.00 level.

Key support levels are below the latter, with the May 8 low at $27.01 rising before challenging the 100-DMA at $26.82.

XAG/USD price action – daily chart

Economic indicator

Personal consumption expenditure – price index (m/m)

Personal Consumption Expenditures (PCE) data, published monthly by the U.S. Bureau of Economic Analysis, measure changes in the prices of goods and services purchased by consumers in the United States (US). MoM data compares U.S. prices a reference month to the previous month. Price changes may cause consumers to switch from purchasing one good to another, and the PCE deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US dollar (USD), while a low reading is bearish.