XAG/USD buoyed by dollar weakness, though unable to sustain above $23.50

• Silver prices rose on Friday, buoyed by month-end profit-taking in the US dollar.
• But XAG/USD has pulled back sharply from intraday highs of $23.50 and remains vulnerable.
• Markets are focused on upcoming US core PCE inflation data and next week’s Fed meeting.

Pre-month profit-taking in the US dollar, which has seen significant strength in recent weeks that has weighed heavily on precious metals, is giving silver spot prices a modest boost. (XAG/USD) on Friday. XAG/USD was last seen up roughly 0.5% at the $23.25 zone.

Silver traders are bracing for the release of US core PCE inflation data for March at 13:30 BST, which is likely to reaffirm the scale of the inflation problem currently plaguing the US economy. US, before the focus turns to next week’s Fed meeting. With lawmakers at the bank now apparently unanimously in agreement that getting interest rates to around 2.5% by the end of the year is appropriate (meaning a series of 50bp rate hikes from next week) and increasingly tilted towards the need to return interest rates above 2.5% to tackle inflation, so risks to the US dollar are likely to remain skewed to the upside for the foreseeable future.

In that regard, it is probably not surprising that XAG/USD bears took the opportunity to sell the precious metal as it rallied back to $23.55 and may be looking for a retest of Thursday’s weekly lows below $23.00. Even if the pullback related to US dollar positioning continues next week and XAG/USD recovers to $23.50 once again, any recovery above the 200-day moving average near $23.80 will be difficult.

Technical levels