Silver Price Forecast: XAG/USD climbs above $18.40, ahead of ECB’s decision, Powell speech

• Silver price advanced more than 2.50% on Wednesday, courtesy of a weaker US dollar and falling US T-bond yields.
• The US trade deficit narrowed, according to the Department of Commerce.
• US Fed officials reiterated the Fed’s commitment to tackling inflation.

Silver price rises during the day amidst a risk-on impulse and broad US dollar weakness ahead of the European Central Bank (ECB) monetary policy meeting, spurring USD buyers to book profits. That, alongside increased demand for risk appetite, kept US dollar buyers at bay. XAG/USD is trading at $18.45, slightly up by 0.09% at the time of writing.

On Wednesday, the US Department of Commerce announced that the US trade deficit narrowed to $-70.6 billion. Exports of goods and services rose by 0.2%, to $259 billion, while imports dropped 2.9%, to $329.9 billion. Even though the data was positive, traders’ reaction was muted, as they remained focused on the ECB’s monetary policy decision.

In the meantime, Fed speakers crossing newswires reiterated their commitment to tame inflation, even if the US economy is going to slow down. Fed Vice Chair Lael Brainard said, “We are in this for as long as it takes to get inflation down.”

Earlier, the Boston Fed President Susan Collins said, “we’ve not yet seen significant declines in prices, and that’s what we’re going to be looking for,” while the Cleveland Fed President Loretta Mester commented that she was not convinced that “inflation had peaked yet.”

Elsewhere the US Dollar Index collapsed more than 0.65%, down at 109.630, a sign of traders booking profits ahead of volatile events. Also, a tailwind for the white metal price is the US 10-year Treasury yield, losing eight bps, down at 3.265%.

What to watch

The US economic calendar on Thursday will feature the Initial Jobless Claims for the week ending on September 3. However, the spotlight would be on Federal Reserve Chair Jerome Powell later in the day.

Silver (XAG/USD) Key Technical Levels