Silver (XAG/USD) fell sharply by 2.3% to approximately $65.80 during the European trading session on Thursday, pressured by a recovering US Dollar. The US Dollar Index (DXY) traded marginally higher at around 99.86, reversing earlier weakness in Asian trading, as investors awaited the release of the US Producer Price Index (PPI) data for August at 12:30 GMT [1].
Market estimates suggest that the US headline PPI increased at a faster annual pace of 5.3% compared to 4.7% in July, while the core PPI, excluding food and energy, is expected to rise to 4.6% from 4.2% previously [1]. The upcoming US Consumer Price Index (CPI) data for August, scheduled for Friday, is also highlighted as a major catalyst for silver prices, with both PPI and CPI data anticipated to significantly influence Federal Reserve interest rate expectations for the September policy meeting [1].
Commerzbank analysts note a notable shift in policy expectations, with Fed funds futures markets now pricing in around a 60% probability of a 25 basis point rate hike at the next week's meeting. They emphasize that the August CPI data is widely seen as the decisive factor in determining whether the Fed will proceed with another rate increase or extend its pause [1].
From a technical perspective, XAG/USD is trading just above the 20-day exponential moving average (EMA) at $65.88, maintaining a modest bullish bias. The Relative Strength Index (RSI) is near neutral at 52, indicating tentative upside momentum. Key support is identified at the August 19 low of $62.19, while resistance levels are at the September 9 high of $68.33 and the August high of $71.12 [1].
CONCLUSION
Silver prices have come under pressure due to a strengthening US Dollar and investor caution ahead of key US inflation data releases. The market is closely watching the upcoming PPI and CPI figures, which are expected to shape Federal Reserve rate hike expectations and drive further volatility in silver prices.