Silver Better Bid Mid-Week
Silver prices are seeing better demand today with the futures market back in the green following a day of selling yesterday. Traders are looking ahead to incoming US inflation data due today and tomorrow (PPI, CPI) as we head towards the September FOMC meeting next week. On the back of yet another big downside miss in the NFP last week, expectations for a cut next week have risen firmly with traders now pricing in a roughly 90% chance of a cut followed by further easing ahead of year end. This dovish backdrop is proving supportive for metals with both gold and silver rising in recent weeks. While stalled for now, silver futures are holding just below the fresh YTD highs printed last week and look poised to advance further should this week’s data prove supportive.
US Inflation on Watch
Given the uptick in dovish expectations over the last month, fuelled by weak jobs data and dovish signalling from Powell, there are risks into this week’s data, however. If tomorrow’s CPI reading in particular confirmed a fresh rise, especially if inflation rises above forecasts, this could see rate cut expectations beyond September being scaled back. In this scenario, USD is likely to squeeze higher while metals should see a sharp correction lower. As such, plenty of volatility risk into today’s PPI release and more so into tomorrow’s CPI release.
Technical Views
Silver
The rally in silver has seen the market breaking out above the 39.2189 level with the bull channel continuing to develop. While supported by the channel lows, focus is on a further push higher. However, worth noting the bearish divergence in momentum studies readings here signalling potential reversal risks. Below 39.2189, 36.6980 will be next support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.