Silver Price Forecast: XAG/USD rallies to $23, focus shifts to US Inflation

NEW YORK (February 12) Silver price (XAG/USD) climbs to near $23 even though the US Dollar Index (DXY) recovers sharply in Monday’s European session. The outlook for the USD Index improves ahead of the United States Consumer Price Index (CPI) data for January, which will be published on Tuesday.

According to the expectations, the monthly headline CPI grew steadily at 0.2%. In a similar timeframe, the core CPI that excludes volatile food and oil prices rose steadily by 0.3%. The annual headline inflation is anticipated to decelerate to 3.0% from 3.4% in December, while core CPI rose at a slightly slower pace of 3.8% against 3.9%.

Federal Reserve (Fed) policymakers have reiterated that rate cuts are not in the picture until they get enough confidence that inflation will sustainably return to the 2% target. The argument supporting holding interest rates at their current level for longer will strengthen if the inflation data turns out persistent.

On Friday, Dallas Fed Bank President Lorie Logan said there is no need to rush for rate cuts until she is convinced that price stability will be achieved.

The opportunity cost of holding non-yielding assets, such as Silver, increases if the Fed holds interest rates higher.

FXStreet