- The price of silver is preparing to end the week with losses of 0.64%.
- The president of the Fed, Powell, reiterated the objective of the US central bank to lower inflation, even if it generates “pain for households and companies”
- Encouraging US economic data weighed on white metal prices, which tumbled more than $0.30.
the price of silver slumps from weekly highs around $19.42, back below $19, after the Fed’s hawkish rhetoric eventually put a dent in the market’s misperception of a Fed pivot. coupled with positive US economic data, it underpinned the greenback, a headwind for the price of the white metal. Thus, XAG/USD is trading at $18.86 a troy ounce at the time of writing this report.
US equities slump after Jerome Powell said the Fed’s main goal is to bring inflation to its 2% target, even if that means slow growth and “pain for households and businesses.” He added that “without price stability, the economy doesn’t work for anyone.”
The dollar index, a gauge of the dollar’s performance against a basket of six currencies, gained more than 0.30% to end the week above the 108,800 mark, while US Treasury yields The US rose, led by the short end of the curve, with Treasury yields rising 2.5 points to 3,398%. Meanwhile, the 10-year Treasury bond yield stands at 3,039%, almost unchanged.
The Fed’s Favorite Inflation Gauge Declines, So Do US Inflation Expectations
Meanwhile, the US Bureau of Economic Analysis reported that US PCE inflation slowed to 6.3% year-on-year, below estimates of 7.4%. Excluding volatile items like food and energy, so-called core PCE fell to 4.6% y/y, below expectations of 4.7%.
Later, the University of Michigan Consumer Sentiment was finally released for August, with a value of 58.2, revised up from the preliminary 55.1, above estimates of 55.2. Although it is a good reading, inflation expectations were the main focus of attention. Americans expect inflation to hit 4.8% over a year’s time, up from a preliminary 5%. Inflation is estimated to peak within five years at around 2.9%, versus a preliminary 3%.
What to watch out for
In the week ahead, the US economic calendar will feature CB Consumer Confidence, ISM Manufacturing PMI, ADP Employment Report and Non-Farm Payrolls.
Silver Daily Chart (XAG/USD)
Source: Fx Street
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