- Silver price falls near $30.70 as investors remain cautious ahead of China’s third plenary session.
- Strong speculation about Fed rate cuts in September keeps the silver price outlook firm.
- Investors are awaiting US PPI data for further guidance on interest rates.
Silver (XAG/USD) price is slumping near $30.70 from a six-week high of $31.80 in the European session on Friday. The white metal is weakening as investors are cautious ahead of China’s third plenary meeting, which is scheduled for next week.
Leading members of the ruling Communist Party are expected to announce policies that favor a boost to the real estate sector and manufacturing activities, as well as measures to encourage consumer spending. A larger-than-expected boost to fiscal spending in the world’s second-largest nation would boost the demand outlook for Silver. Industrial demand for the white metal has increased significantly in sectors such as automobiles and green hydrogen, etc.
Meanwhile, the overall silver price outlook remains firm as the recent United States (US) Consumer Price Index (CPI) report for June has confirmed that price pressures are on track to return to the desired 2% rate. Signs of resumption in the disinflation process have raised expectations of early rate cuts by the Federal Reserve (Fed). Traders have significantly increased bets in favor of the Fed starting to reduce interest rates as early as the September meeting.
Rising expectations of Fed rate cuts have weighed heavily on the US Dollar (USD) and bond yields. The US Dollar Index (DXY), which tracks the value of the USD against six major currencies, falls to 104.35. US 10-year Treasury bond yields bounce near 4.22% but have fallen vertically from 4.30%.
On Friday, investors will focus on the US Producer Price Index (PPI) data for June, due out at 12:30 GMT.
Technical analysis of Silver
Silver price is trading sideways in a tight range around $31.00, suggesting a sharp contraction in volatility. The overall trend remains bullish as it has turned sideways after a decisive breakout of the Bullish Flag chart formation on a four-hour time frame.
The 50-period exponential moving average (EMA) near $30.65 continues to provide support to the silver price bulls.
The 14-period Relative Strength Index (RSI) fails to break above 60.00. A decisive break above it would push the momentum higher.
Silver four-hour chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
