Silver (XAG/USD) extended its decline on Tuesday, trading around $67.50 at the time of writing, marking a 1.43% drop for the day and continuing a two-day correction as investors exercised caution ahead of the upcoming release of the United States Personal Consumption Expenditures (PCE) Price Index on Wednesday [1]. The core PCE inflation, which is the Federal Reserve’s preferred measure for price pressures, is anticipated to remain steady at 3.4% year-over-year in July. A higher-than-expected reading could heighten concerns about tighter monetary policy and exert further downward pressure on Silver, whereas easing inflation could bolster expectations for a policy hold and support precious metals [1].
Market participants are also closely watching US labor market signals. The four-week average of the ADP Employment Change increased to 11.75K jobs per week in early August, up from 9.5K previously, indicating some recovery in private-sector hiring. However, this improvement has not fully alleviated concerns about the broader trajectory of the US economy [1].
Despite the recent correction in Silver, US fiscal risks may limit further bearish pressure. The US Treasury plans to double its buyback operations for longer-dated bonds, and there is speculation that Treasury Secretary Scott Bessent could deploy up to $1 trillion from the Treasury General Account (TGA). These actions could influence market liquidity and bond yields, while also reviving the US Dollar debasement narrative amid elevated public debt levels [1].
Geopolitical tensions, particularly the expansion of US sanctions against Iran targeting oil, shipping, technology, gold, and digital assets, add to market uncertainty. According to Commerzbank, these developments could increase safe-haven demand and help contain Silver’s losses [1]. Additionally, Silver’s industrial fundamentals remain robust, with ongoing demand from the green-energy transition, especially in photovoltaic solar panel production, electric vehicles, and the rapid growth of artificial intelligence data centers. This combination of industrial demand and safe-haven appeal is expected to continue underpinning Silver despite the current correction [1].
From a technical perspective, XAG/USD trades at $67.92, with near-term resistance at the 100-hour Simple Moving Average (SMA) around $68.01 and support at the 200-hour SMA near $66.40. The Relative Strength Index (RSI) at approximately 44.00 suggests subdued bullish momentum, leaving Silver vulnerable to further corrective pressure if support levels are breached [1].
CONCLUSION
Silver is experiencing a short-term correction ahead of key US inflation data, with market sentiment cautious due to monetary policy uncertainty and fiscal risks. However, underlying support from industrial demand, geopolitical tensions, and potential safe-haven flows may help contain further losses. Investors are likely to remain focused on upcoming US economic data and policy signals for direction.