- After the US CPI report, the white metal trims some of Thursday’s losses, up 0.72%.
- Inflation in the US jumps to a 30-year high level not seen since 1982, close to 7%.
- Silver Price Forecast: Strong support around $22.00-15 might keep bulls in charge, though downside risks remain.
Silver (XAG/USD) pares some of Thursday’s losses during the New York session, up some 0.96% trading at $22.14 at press time. In the American session, the market sentiment switched towards a risk-on, with US equities rising, between 0.17% and 0.60%, while US Treasuries fell as investors trimmed bets on the pace of the Fed bond taper.
Early in the New York session, the US Department of Labor released the Consumer Price Index for November. Numbers came within expectations, with the headline on an annual basis at 6.8%, trailed by October’s 6.2% figure. Meanwhile, Core CPI, which excludes energy and food, rose 4.9%, higher than the October 3.6%. These figures have not been seen since 1982, and its upward move is attributed mainly to elevated prices in gasoline, shelter, food, and vehicles.
The data cemented the Fed’s expectations to trigger a faster QE’s reduction as expressed by policymakers led by Chair Powell in the last week. Some policymakers said that the central bank should decrease the amount by double the reported on November’s meeting, so in that scenario, the Federal Reserve would end its stimulus by the first quarter of 2022. That would leave some room for the US central bank in the case of needing to raise rates sooner than estimated.
In the meantime, US T-bond yields extend their fall, with 2s, 5s, and 10s, down between 2-4.0 basis points, sitting at 0.6483%, 1.2288%, and 1.465%, each. Moreover, following the US Treasuries footsteps, the US Dollar Index, which tracks the greenback’s performance against a basket of six rivals, slides 0.26%, down to 96.01, at press time.
XAG/USD Price Forecast: Technical outlook
The silver 1-hour chart shows a $0.30 spike once the US CPI headline news crossed the wires, printing a daily high of around $22.23. The 50-hour simple moving average (SMA) at $22.14 is under pressure at press time, but it has another support level around the area, with the central daily pivot at $22.07.
Silver’s first resistance would be the confluence of the 100-hour SMA and the R1 daily pivot around the $22.25-31, followed but the 200-hour SMA at $22.41. A breach of the latter would expose the December 9 high at $22.46.
On the flip side, the central daily pivot at $22.07 would be the first line of defense for the non-yielding metal bulls. A break below that level would expose $22.00, followed by the December 9 low at $21.85.