- The price of silver records its first weekly gain in the last nine weeks, rising 9%.
- Falling US Treasury yields undermine the greenback and bolster precious metal prices.
- Those responsible for the Fed are confident of achieving a soft landing, although they recognize that further rate hikes are necessary.
the price of silver rises for four consecutive days, breaking above $20.00 for the first time since July 5, setting up to end the week with gains of almost 9%, despite US inflation data, specifically the PCE, the Fed’s preferred gauge of inflation, beat estimates. The operators of XAGUSD they ignored the news and kept the price of the white metal around $20.25, up 0.11% at the time of writing.
Silver rises amid bullish sentiment
Global equities continue to trade positive, reflecting upbeat sentiment. Meanwhile, the US Commerce Department revealed that June personal consumption spending rose 1% mom, above estimates of 0.9%. In annual terms, it rose 6.8%, compared to the 6.7% expected by analysts.
Late in the day, the University of Michigan released its final July Consumer Sentiment reading, which rose 51.5, above estimates. In the same survey, the inflation expectations of Americans for a 5-year horizon rose from 2.8% (preliminary) to 2.9%, although below the June readings.
Bostic and Waller of the Fed gave statements
During the New York session, Atlanta Fed President Raphael Bostic said the Fed “is going to have to do more in terms of interest rate movements.” Bostic said he doesn’t think the country is in a recession after Thursday’s advanced second-quarter GDP was weaker than estimated at -0.9%. Meanwhile, Christopher Waller said “a soft landing is a plausible outcome for the job market going forward.”
Meanwhile, US bond yields have fallen significantly since Wednesday, after the US Federal Reserve raised rates by 75 basis points. The 10-year US Treasury yield fell from weekly highs around 2,845% to 2,636%, down 20 basis points, creating a tailwind for precious metal prices.
It is worth noting that the US 2yr-10yr yield curve inversion, which flattened during the week, but at the time of writing, is dipping further at -0.255 %, further fueling expectations of an upcoming US recession.
Thus, undermined by falling US Treasury yields, the greenback has weakened, as the US Dollar Index (DXY) shows. DXY loses 0.54% on the week and stands at 106,000.
What must be considered
Next week, the US economic docket will include the S&P Global and ISM manufacturing, services and composite PMIs. Additionally, the US Non-Farm Payrolls report, along with the Fed statement, will dominate the news headlines.
Silver (XAGUSD) Key Technical Levels
|Last Price Today||20.27|
|Today’s Daily Change||0.27|
|Today’s Daily Change %||1.35|
|Today’s Daily Opening||twenty|
|20 Daily SMA||19.04|
|50 Daily SMA||20.59|
|100 Daily SMA||22.29|
|200 Daily SMA||22.92|
|Previous Daily High||20.02|
|Previous Daily Minimum||19.06|
|Previous Maximum Weekly||19.1|
|Previous Weekly Minimum||18.25|
|Monthly Prior Maximum||22.52|
|Previous Monthly Minimum||20.22|
|Daily Fibonacci 38.2%||19.66|
|Daily Fibonacci 61.8%||19.43|
|Daily Pivot Point S1||19.37|
|Daily Pivot Point S2||18.73|
|Daily Pivot Point S3||18.4|
|Daily Pivot Point R1||20.33|
|Daily Pivot Point R2||20.66|
|Daily Pivot Point R3||21.3|
Source: Fx Street