XAG/USD falls below $19.50 as traders brace for next week’s FOMC decision
- Silver prices decline at the 100-day EMA (Exponential Moving Average) and extend losses to the 50-day EMA at $19.08.
- US core PCE rose 5.1% yoy, beating estimates, paving the way for further tightening.
- Investors are focused on the Fed’s November policy meeting, with expectations for the US Federal Reserve rising 75 basis points.
Silver prices stumbled to a key resistance level during the New York session as US economic data warrants further Federal Reserve action, while a risk stimulus keeps safe-haven assets under pressure but the US dollar bucked the trend , as of next week the Federal Reserve monetary policy decision lurks. The XAG/USD pair is trading at $19.17 a troy ounce, down 2% after hitting a daily high of $19.63.
US core PCE justifies further Fed aggression
Wall Street extends gains despite greenback trending higher. A measure of inflation released by the Commerce Department, which is also the Fed’s preferred indicator of inflation, rose 0.5% MoM, up from the previous month, justifying the need for further rate hikes amid a Fed pivot narrative circulating in financial markets . Also, the number rose 5.1% year over year, beating forecasts of 4.9%.
In a separate report, the employment cost index (ECI), an indicator used by the Fed to combat wage inflation, rose 1.2% in the July-September period, as reported by the Labor Department.
Aside from the inflation data, the University of Michigan’s consumer sentiment was unchanged at 59.9 when it was last released in October, while inflation expectations were little changed. According to the survey, one-year inflation is estimated at 5% from 5.1%, while it is estimated at 2.9% for 5 years.
Recently, the Dallas Fed September trimmed mean PCE fell slightly from 6% to 4.3%. At the same time, the Atlanta Fed has GDPNow forecast for Q4 is 3.1%.
Silver is on the defensive as US Treasury yields soared, supporting the US dollar
The market’s reaction to the US data was felt in bond markets as Treasuries sold off which was positive news for bond yields. The US 10-year Treasury yield is up 9 basis points to 4.01%, a headwind for the precious metals segment.
Meanwhile the US dollar indexa measure of the dollar’s value against a basket of its peers, rose 0.30% to 110.895, supported by
Market participants now turn their attention to next week’s Federal Open Market Committee (FOMC), where most analysts expect the Fed to hike rates Prices by 75 bps as reported by the CME FedWatch Tool with a probability of 84.5%. However, the December session will be split between 50 and 75 basis points with the majority of investors confident