Silver Price Forecast: US Inflation Data in Focus

Summary:

Silver price is trading lower ahead of the US inflation data. After the expected knee-jerk reaction, silver price is likely to rebound.

Silver price is on a decline ahead of the US inflation data. Economists expect consumer prices to have risen by 4.7% in May on a year-on-year basis. This is in comparison to the prior month’s 4.2%. Notably, the US CPI numbers have come in higher-than-expected since March as inflation concerns heighten.

With the exclusion of food and energy components, analysts expect a core CPI reading of 3.4% YoY. This would be the highest surge since 1993. Higher-than-expected CPI numbers may trigger a knee-jerk reaction. However, the inflation data is likely to act as a bullish catalyst for silver price due to the metal’s status as a hedge against inflation.

Silver price will also be reacting to the initial jobless claims data. Analysts expect a reading of 370,000. The number is lower than the prior week’s 385,000. A better-than-expected reading will offer support to the US dollar while exerting pressure on the precious metal.

Silver technical outlook

Silver price is down by 0.49% at 27.63. In the previous session, it reached a one-week high of 28 before pulling back. On a two-hour chart, it is trading slightly below the 25 and 50-day exponential moving averages. I expect the precious metal to seesaw around the EMAs at 27.72 ahead of the US inflation data. As a reaction to the US CPI data, it may drop to find support at 27.50. However, it may then rebound to its next target at 28.