Silver Price Analysis: XAG/USD drops back under $21.50 after hotter than expected US inflation figures
11.05.2022, 12:57

Silver Price Analysis: XAG/USD drops back under $21.50 after hotter than expected US inflation figures

  • Silver prices have pulled lower from earlier highs near $22.00 following hotter than expected US inflation data.
  • XAG/USD is back under $21.50 and eyeing a move to fresh multi-year lows under $21.00 as hawkish Fed bets build.

Spot silver (XAG/USD) prices have fallen back sharply from earlier session highs in the upper $21.00s per troy ounce and are now back to trading back under the $21.50. At current levels in the $21.40s, on-the-day gains have now been pared to about 1.0%. Just released US Consumer Price Index data showed a slower than expected moderation in the YoY rate of headline price pressures and a larger than expected jump in MoM Core price pressures in April.

The US dollar and US yields jumped as a result and this explains the recent pullback in XAG/USD. Some traders had been hoping for a moderation in inflation pressures to ease the pressure on the Fed to tighten monetary policy so aggressive this year and next. The latest data certainly doesn’t do that, hence the rebuilding of some hawkish Fed bets.

After breaking out to its lowest levels under $21.20 since mid-2020 on Tuesday, XAG/USD attempted rebound has been cut short. Should the US dollar and yields continue to press higher, a drop towards $21.00 certainly seems on the cards. A break lower would open the door to an eventual drop to the next area of key support under the $20 mark.

 

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