Silver prices slip below $19.00 on Powell’s comments, bad sentiment

  • Silver prices are preparing to end the week down 0.64%.
  • Fed Chairman Powell reiterated the Federal Reserve’s goal of bringing inflation down, even if it causes “pain for households and businesses.”
  • Upbeat US economic data weighed on white metal prices, plunging more than $0.30.

Silver prices are falling back below $19.00 from a weekly high around $19.42 after the Fed’s hawkish rhetoric finally takes its toll on the market‘s misperception of a Fed pivot. This, along with positive US economic data, underpinned the greenback, a headwind for the white metal price. Therefore, XAG/USD is trading at $18.86 a troy ounce at the time of writing.

US stocks tumble after Jerome Powell said the Fed’s main goal is to bring inflation to its 2% target, even as it spurs slow growth and “pain for households and businesses”. He added that “without price stability, the economy doesn’t work for anyone”.

The US Dollar Index, a measure of the Dollar’s performance against a basket of six currencies, is up more than 0.30% and is expected to end the week above the 108.800 figure as US Treasury yields rose , led by the short end of the curve, up 2 seconds, two and a half bps, at 3.398%. Meanwhile, the US benchmark 10-year note is almost unchanged at 3.039%.

The Fed’s preferred inflation indicator is lower, as are US inflation expectations

Meanwhile, the US Bureau of Economic Analysis reported that US inflation, as measured by the PCE, fell to 6.3% yoy, down from the 7.4% estimate. Excluding volatile items like food and energy, so-called core PCE slowed to 4.6% year-on-year, below expectations of 4.7%.

Later, the final University of Michigan consumer sentiment release for August came in at 58.2, revised up from 55.1 pre-reported versus 55.2 estimates. While a good read, the focus was on inflation expectations. Americans expect inflation to top out at around 4.8% in the one-year period, versus 5% so far. Inflation is estimated to peak at around 2.9% within five years, versus 3% for now.

Something to see

Next week’s US economic calendar will include US CB Consumer Confidence, ISM Manufacturing PMI, ADP Employment Report and Nonfarm Payrolls.

Silver (XAG/USD) daily chart

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