Silver (XAG/USD) traded in a tight range around $61.45 during the European session on Wednesday, with the market consolidating ahead of the release of the United States Personal Consumption Expenditure (PCE) Price Index data for August, scheduled for 12:30 GMT [1]. The PCE inflation data is highly anticipated, as Federal Reserve officials have emphasized that persistent price pressures, driven by both energy supply shocks and strong demand related to Artificial Intelligence, remain a key concern [1].
The core PCE inflation rate is expected to remain steady at 3.3% year-on-year, with the monthly figure projected to rise by 0.3%, up from the previous 0.2% reading [1]. This data is expected to significantly influence market expectations regarding the Federal Reserve's interest rate trajectory. According to TD Securities, an October rate hike by the Fed is becoming increasingly likely, with the bank's economists arguing that the Fed is unlikely to regain confidence in inflation progress before the October meeting. They note that most Fed participants expect further tightening, and it does not make sense to wait until December to hike again, reinforcing a policy bias toward additional near-term tightening [1].
Higher interest rates typically benefit interest-bearing assets such as Treasury yields but are negative for non-yielding assets like silver [1]. In the lead-up to the PCE data, investors are also watching the ADP Employment Change data for September, which is expected to show 70,000 new private sector jobs, up from 38,000 in August. Later in the week, the Nonfarm Payrolls (NFP) data for September will serve as another major catalyst for Fed rate expectations [1].
From a technical perspective, XAG/USD is trading at $61.32, maintaining a bearish near-term tone as it remains below the 20-period exponential moving average (EMA) at $64.09. The Relative Strength Index (14) stands at 40.66, indicating neutral-to-weak momentum, with sellers retaining the upper hand but without the market being oversold. Immediate resistance is seen at $62.26, with further resistance at the 20-day EMA near $64.09, while the psychological $60 level serves as key support [1].
CONCLUSION
Silver prices are consolidating near $61.50 as investors await crucial US inflation data that could shape the Federal Reserve's next policy moves. With expectations for further Fed tightening, the outlook for non-yielding assets like silver remains cautious in the near term. Technical indicators suggest a bearish bias persists unless prices can reclaim key resistance levels.