Silver (XAG/USD) experienced a recovery on Thursday, trading around $734.11 after rebounding from a one-month low near $71.79 earlier in the day. This movement followed the release of the latest US Personal Consumption Expenditures (PCE) data, which showed the core PCE Price Index rising 0.2% month-over-month in April—below market expectations and down from the 0.3% increase in March. The annual Core PCE reading accelerated to 3.3% year-over-year from 3.2% in March, matching market expectations [1].
The US Dollar Index (DXY) eased to around 99.15 after reaching a seven-week high of 99.54 earlier in the session. The pullback in the US Dollar provided some relief to Silver prices, but the overall macro environment remains challenging for the precious metal. Ongoing geopolitical tensions in the Middle East have kept oil prices elevated due to supply disruptions through the Strait of Hormuz, contributing to inflationary pressures [1].
Despite the short-term rebound, the upside for Silver remains limited. Traders continue to favor the US Dollar as a safe haven, which keeps pressure on Dollar-denominated commodities like Silver. Additionally, rising expectations that the Federal Reserve could raise interest rates to combat energy-driven inflation are adding further pressure on non-yielding assets such as Silver [1].
Technical analysis indicates that XAG/USD maintains a mildly bearish near-term tone, trading below the 20-period Bollinger Simple Moving Average (SMA) around $78 and well under the upper band near $86.76. The Relative Strength Index (RSI) is soft at 44, and the Average Directional Index (ADX) is very low near 12, suggesting downside momentum within a weakly trending environment. Immediate support is seen at the lower Bollinger band around $69.29, with a more substantial floor near $60.00 if bearish pressure intensifies [1].
CONCLUSION
Silver has rebounded from recent lows following softer-than-expected US PCE data, but the overall outlook remains bearish due to persistent macroeconomic headwinds and expectations of further Fed rate hikes. Market participants continue to favor the US Dollar for safety, limiting upside potential for Silver in the near term.