Silver Price Analysis: XAG/USD Corrects from $25 as the Fed’s Preferred Inflation Tool Remains Sticky

• Silver price corrects sharply from $25.00 as the US PCE Price Index remains tight.
• The US Dollar Index (DXY) maintains gains around 103.60 as persistent PCE data offsets the impact of lower labor demand.
• Silver is approaching the horizontal resistance drawn from the July 20 high around $25.27.

The price of it Silver (XAG/USD) is facing selling pressure near the $25.00 psychological resistance as the US Bureau of Labor Statistics reported that the Personal Consumption Expenditure (PCE) price index held firm in July.

Headline and core monthly PCE grew at a steady pace of 0.2%. Also, core and headline annual PCE accelerated marginally to 3.3% and 4.2%, as expected by market participants.

On the other hand, the US Department of Labor reported weekly claims for unemployment benefits. For the week ending Aug. 25, people filing for jobless benefits fell to 228,000 versus expectations of 235,000 and the previous reading of 232,000.

Dollar Index (DXY) holds gains around 103.60 and is looking to extend gains beyond persistent data PCE offsets the impact of softer labor demand reported US Automatic Data Processing (ADP) for August, published on Wednesday.

After the Fed’s preferred inflation measure, investors are focused on the US Non-Farm Payrolls (NFP) data for August, due to be released on Friday at 12:30 GMT. In line with expectations, the US labor market posted a new addition of 170,000 payrolls, down from July’s reading of 187,000. The unemployment rate remained unchanged. The Unemployment Rate remains at 3.5%. On the other hand, the average earnings per hour will be published.

Silver Technical Analysis

Silver is approaching horizontal resistance drawn from the July 20 high around $25.27 on a two-hour scale. The upward slope of the 50-period EMA indicates that the upside momentum is extremely bullish.

The Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, indicating that bullish momentum is active.

2 hour chart