At 12:11 GMT, XAG/USD is trading $30.01, up $0.11 or +0.36%.
Will dollar weakness and lower interest rates support silver?
Silver’s modest rally was underpinned by a weaker US dollar and falling government bond yields. Ten-year Treasury yields fell 2 basis points to 4.771%, retreating from recent highs, while the US dollar index fell 0.1%. These moves have made silver more attractive to international investors.
Tuesday’s wholesale price data, which rose less than expected, provided some relief to inflation concerns. This development helped cool government bond yields and supported silver prices. However, the market remains cautious ahead of the publication of the consumer price indices (CPI) later today.
How will inflation data affect silver prices?
The CPI report, due at 1:30 PM GMT, is expected to show an annual inflation increase of 2.9%. A weaker-than-expected outcome could strengthen the case for Federal Reserve rate cuts, a scenario that generally favors silver.
Conversely, stronger inflationary pressures could undermine interest rate cut expectations, causing US dollar and government bond yields to rise, weighing on silver prices. With the Federal Reserve showing no urgency to adjust rates, traders are closely watching the inflation outlook to gauge future monetary policy moves.
What’s next for silver prices?
The silver price is hovering at a crucial level, with $29.97 acting as the key to further gains. A breakout here could push silver towards $30.54 and possibly $32.33, which could draw buyers back into the market. However, if momentum doesn’t build, the metal could fall, testing support at $29.70 and possibly $28.74.