Silver Price Forecast: XAG/USD corrects below $68 in countdown to US PCE Inflation data
- Silver price declines to near $67.87 amid caution ahead of the US PCE Inflation data for July.
- The US core PCE Inflation is seen remaining steady at 3.4% YoY.
- Investors also await the outcome of the Jackson Hole Symposium.
Silver price (XAG/USD) is down 1.6% to near $67.87 during the Asian trading session on Tuesday. The white metal is under pressure as investors turn cautious ahead of the United States (US) Personal Consumer Expenditure Price Index (PCE) data for July, which will be released on Wednesday.
Investors will pay close attention to the US core PCE inflation data, which is the Federal Reserve’s (Fed) preferred inflation gauge, to get fresh cues regarding the monetary policy outlook.
Fed’s preferred gauge seen staying in strike zone as US spending cools
According to TD Securities, July’s inflation data should keep the Fed’s preferred gauge comfortably aligned with its objectives, with analysts expecting 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 anticipate that "headline prices likely rose by a tamer 0.15%," while stressing that "more importantly, we expect the market-based core PCE to stay contained at 0.13% m/m." On the activity side, TD highlights 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, looking further ahead, notes that "we look for gradual disinflation to resume in 2027."
According to the FX Economic Calendar, the annualized core PCE inflation is expected to have grown at a steady pace of 3.4%.
Higher inflationary pressures prompt fears of interest rate hikes by the Federal Reserve (Fed). Such a scenario bodes poorly for non-yielding assets, like Silver.
This week, the major trigger for the Silver price will be Fed Chair Kevin Warsh’s comments at theJackson Hole Symposium on Thursday. Historically, Warsh is known to avoid providing “forward guidance” on interest rates, but will likely warn of upside inflation risks.
Silver Technical Analysis
XAG/USD trades at around $67.87, maintaining a bullish near-term tone as price holds decisively above the 20-day exponential moving average (EMA) at $64.64.
The Relative Strength Index (RSI) stands around 61.7, staying in positive territory and suggesting that upside momentum remains constructive even after the latest consolidation.
On the downside, immediate support is seen at the $64.64 area where the 20-day EMA aligns as the first significant demand zone, with any deeper pullback likely viewed as corrective while price holds above this moving average. On the upside, the white metal needs to break above the August 21 high near $70 to extend the rally towards the June 15 high at $71.33, followed by the June high at 77.00.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.