Silver Prices: XAG/USD tumbles from $30 as US Dollar gains ground with US Inflation in focus

LONDON (August 28) Silver price (XAG/USD) falls sharply from the psychological resistance of $30.00 in Wednesday’s European session. The white metal tumbles as the US Dollar (USD) recovers some ground after declining to a fresh year-to-date (YTD) low. Historically, buying interest in the US Dollar bodes poorly for the Silver price, given that it makes the Silver price expensive for investors.

The US Dollar (DXY), which tracks the Greenback’s value against six major currencies, delivers a mild recovery move to near 100.85 from 100.50. 10-year US Treasury yields drop to near 3.82%.

A mild recovery in the US Dollar appears to be the outcome of uncertainty among market participants ahead of the United States (US) core Personal Consumption Expenditure inflation (PCE) data for July, which will be published on Friday. The near-term outlook of the US Dollar has remained vulnerable as the Federal Reserve (Fed) is widely anticipated to start reducing interest rates from the September meeting. While trades remain split over the likely rate cut size.

The core PCE price index data, a Federal Reserve’s (Fed) preferred inflation measure, is expected to influence market expectations for the potential size of interest rate cuts in September. Economists estimated that annual underlying inflation accelerated to 2.7% from 2.6% in July, with month-on-month price pressures growing steadily by 0.2%.

FXStreet