Silver Price Analysis: XAG/USD boosted by buck weakness, though unable to hold at session highs above $23.50

• Silver prices have risen on Friday, boosted by month-end profit-taking in the US dollar.
• But XAG/USD has pulled back sharply from intra-day highs in the $23.50s, and remains vulnerable.
• Markets are focused on upcoming US Core PCE inflation data and next week’s Fed meeting.

Pre-month-end profit-taking in the US dollar, which has seen significant strength in recent weeks that has weighed heavily on precious metals, is giving spot silver (XAG/USD) prices a modest lift on Friday. XAG/USD was last trading higher by about 0.5% in the $23.25 area per troy ounce, more than 1.5% higher versus Thursday’s sub-$23.00 lows, though the precious metal has seen a sharp more than 1.4% pullback from earlier session highs in the $23.50s.

Silver traders are bracing for the release of US Core PCE inflation data for March at 1330BST, which will probably just reaffirm the scale of the inflation problem currently plaguing the US economy, before focus then turns to next week’s Fed meeting. With policymakers at the bank now seemingly in unanimous agreement that getting interest rates to around 2.5% by the year’s end is appropriate (meaning a series of 50 bps rate hikes, starting next week, are likely) and increasingly leaning toward’s the need to take interest rates into outright restrictive territory (i.e. above 2.5%) to tackle inflation, risks to the US dollar likely remain tilted to the upside for the foreseeable future.

In that regard, it probably isn't to surprising that XAG/USD bears jumped on the opportunity to sell the precious metal when it rallied back into the $23.50s and may be looking for a retest of Thursday’s weekly lows under $23.00. Even if the positioning-related pullback in the US dollar does continue next week and XAG/USD rebounds into the mid-$23.00s once again, any recovery back above the 200-Day Moving Average near $23.80 will be difficult.