- Silver rises in the $22.25 area on Monday, after hitting multi-week highs above $22.50 earlier in the day.
- But silver remains within recent intraday ranges ahead of Friday’s US CPI.
The price of silver (XAG/USD), while trading with healthy gains on the day of around 1.5%, have remained largely within recent intraday ranges. XAG/USD managed to post new multi-week highs above the $22.50/troy ounce mark earlier in the day, but has since pulled back to the $22.25 area, amid a general lack of catalysts to stimulate cross-asset price action.
Last Friday’s May US labor market report didn’t seem to change the direction of the markets much, with silver remaining close to its pre-NFP levels. The data showed a slightly faster-than-expected pace of US employment growth, but also showed that wage pressures eased, as expected, contributing to the idea that price pressures in the US economy could be starting to give way.
The US inflation story (whether it is easing, how quickly and how the Fed will respond) remains in the spotlight this week with the release of consumer price inflation (CPI) data. ) from the US on Friday. After price pressures showed signs of a modest retracement from April’s elevated levels, market participants will be watching to see if this trend continued last month.
If so, that takes pressure off the Faith to keep tightening monetary policy at a rapid pace. A surprise to the downside would, for example, make a 50bp rate hike in September much less likely (50bp rate hikes in June and July are currently considered a given). This could put the dollar and long-term US bond yields under even more pressure, giving silver tailwinds.
Therefore, XAG/USD has a good chance of breaking out of the $22.50 upper area and moving towards its 50 and 200 day moving averages in the $23.50 lower/middle area later this/next week. However, the next few days will be very quiet as there won’t be much big data in the US and no talk of the Fed as policymakers have entered the so-called “blackout” ahead of the Fed meeting. in the next week. The ECB’s decision on Thursday will be worthy of attention as the bank becomes increasingly aggressive.
Technical levels
Source: Fx Street
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