Silver Price Forecast: XAG/USD trades firmly near $67.60 ahead of US PPI, CPI data
- Silver price rises to near $67.60 as the US Dollar faces selling pressure.
- The US PPI report will likely show faster growth in inflation at the producer level.
- Investors will pay close attention to the US CPI data scheduled for Friday.
Silver price (XAG/USD) trades higher at around $67.60 during the Asian trading session on Thursday. The white metal reflects strength as the US Dollar is under pressure ahead of the United States (US) Producer Price Index (PPI) data for August, which will be published at 12:30 GMT.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally lower to near 98.75. The USD Index is close to its two-week low of 98.60 posted on Wednesday.
A lower US Dollar makes the Silver price a favorable risk-reward bet for investors.
Investors will closely track the US producer inflation data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
The US PPI report is expected to show that headline inflation at the factory level accelerated to 5.3% Year-on-Year (YoY) from 4.7% in July. The core PPI – which excludes volatile food and energy items – is also expected to arrive higher at 4.6% YoY against the previous reading of 4.2%.
Signs of price pressures accelerating at the producer level would prompt expectations of Federal Reserve (Fed) interest rate hikes in the near term, a scenario that diminishes the appeal of non-yielding assets, such as Silver.
This week, the major trigger for the Silver price and the US Dollar will be the US Consumer Price Index (CPI) data for August, which will be released on Friday.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $67.60. The near-term bias appears bullish as price holds above the 20-day Exponential Moving Average (EMA) at roughly $66.02, suggesting the recent advance remains supported by the short-term trend.
The Relative Strength Index (RSI) around 56 keeps a positive yet not overbought tone, hinting that upside momentum is intact but not stretched.
On the downside, immediate support is seen at the 20-day EMA at $66.02, reinforcing a deeper demand zone if a pullback develops. Looking up, the August high at $71.12 is the critical hurdle for the Silver price.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Why do people invest in Silver?
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.
Which factors influence Silver prices?
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.
How does industrial demand affect Silver 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.
How do Silver prices react to Gold’s moves?
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.