Silver Holds $38.17 as CPI Data and Fed Cut Bets Put Bulls to the Test
Silver prices (XAG/USD) are flat at $38.17 as geopolitical tensions ease and safe-haven demand subsides.
Quick overview
- Silver prices are currently flat at $38.17 as geopolitical tensions ease and safe-haven demand decreases.
- The upcoming Consumer Price Index (CPI) report is crucial, with expectations of a 0.3% rise in core inflation, which could impact silver prices.
- Silver is trading within an ascending channel, with key support at $37.58 and resistance at $38.50, indicating potential volatility ahead.
- Market sentiment could shift significantly based on CPI results and Federal Reserve actions, making this week pivotal for silver traders.
Silver prices (XAG/USD) are flat at $38.17 as geopolitical tensions ease and safe-haven demand subsides. News that President Donald Trump will meet with Russian President Vladimir Putin in Alaska on Aug. 15 to discuss ending the Ukraine war has calmed the market and shifted focus to US inflation data.
Tuesday’s Consumer Price Index (CPI) is now the key, with analysts expecting core inflation to rise 0.3% for a 3.0% annual rate – still above the Fed’s 2% target. A hotter reading could boost the US dollar and pressure silver, while a softer print could reinforce rate cut expectations.
Last week’s weak US jobs report boosted the chances of a September Fed rate cut, with CME FedWatch showing 90% probability. At least one more cut by year-end is now priced in, which is bullish for non-yielding assets like silver.
Silver Technicals in a Tight Range
On the 4-hour chart, silver is still inside an ascending channel, recovering from $36.24 with higher highs and higher lows. But repeated upper wick rejections at $38.50 suggest buyer hesitation.
Support is at the 50-SMA ($37.58) and the channel’s lower boundary. A clean break below could turn sentiment bearish, $37.31 and $36.80 are next. RSI is 57.32 and has cooled from overbought, room for more upside if momentum returns. MACD is flattening and the lines are converging, a sign of a momentum shift.
Key levels:
- Support: $37.58, $37.31, $36.80
- Resistance: $38.50, $39.05, $39.53
- RSI: Cooling from overbought, room for bounce
- MACD: Momentum flattening, watch for crossover
Silver (XAU/USD) Trade Setup for the Week
For bulls, a bounce from the 50-SMA with a close above $38.50 could target $39.05 and $39.53 short term. This would require strong buying volume and follow through to confirm the break.
For bears, a close below $37.58 would target $37.31, then $36.80. Newbies, remember channel breaks can be fast, so use stops. With CPI and Fed on the agenda, silver is set for a wild week.
Whatever the break, this will be the week that sets the tone for August.
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