What’s Behind Silver’s Silence at $36.50? Investors Hold Their Breath!
Silver (XAG/USD) prices traded in a tight range around $36.50 during European trading hours on Wednesday. The white metal consolidated as investors await the US Consumer Price Index (CPI) data for May, due out at 12:30 GMT.
Economists expect US headline inflation to accelerate to 2.5% annually, compared to 2.3% in April. In the same period, core CPI – which excludes volatile food and energy prices – grew by 2.9%, faster than the previous release of 2.8%. On a monthly basis, headline and core CPI are expected to grow by 0.2% and 0.3%, respectively.
The scenario of rising price pressures would allow Federal Reserve (Fed) officials to maintain their stance of keeping interest rates at current levels for quite some time until they get clarity on how much impact US President Donald Trump’s new economic policies will have on the economic outlook and inflation.
In theory, maintaining a tight monetary policy stance by the Fed for a longer period of time bodes ill for non-yielding assets, such as Silver.
Ahead of the US inflation data for May, the US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, rose near 99.20.
On the global front, trade tensions between the US and China have eased after two meetings in London. US Commerce Secretary Howard Lutnick has expressed confidence that Washington will lift export controls on advanced chips after China lifts export restrictions on “rare earths”.
Historically, signs of easing global tensions reduce the appeal of safe-haven assets, such as Silver.
Source: FXStreet
