Silver Price Analysis: XAG/USD drops to near $24.00 amid non-directional USD Index

• Silver price has shown a minor decline to near $24.00 as the USD Index is trading sideways.
• The upside in the USD Index seems restricted to around 102.40 due to soft short-term consumer inflation expectations.
• Silver price is approaching the 23.6% Fibonacci retracement at $26.70.

Silver price (XAU/USD) has shown a marginal correction to near $24.00 considering non-directional cues from the US Dollar Index (DXY). The white metal is majorly trading in a range of $24.00-24.20 as investors are assessing soft United States inflation expectations and improved consumer sentiment to freshly discount the impact of economic indicators in the USD Index.

S&P500 futures have recovered their entire losses generated in Asia and have turned positive as investors are confident that the Federal Reserve (Fed) won’t be very harsh on interest rates ahead. The risk appetite theme has been underpinned by the market participants as expectations of only one interest rate hike from the Fed have trimmed fears of recession. The 10-year US Treasury Yields have dropped to 3.76%.

The upside in the USD Index seems restricted to around 102.40 due to soft short-term consumer inflation expectations. United States individuals are expecting that inflation will climb to 3.3% at an annualized rate over the next year, down from the expectations of 4.2% released in May. The figure is the lowest since March 2021 and has infused hope in the street that the Fed will announce only one more interest rate hike this year.

Meanwhile, Chicago Fed Bank President Austan Goolsebee commented that there is conflicting data on whether we are too hot or whether we have done enough. He further added labor market is too hot but working hours are declining.

Silver technical analysis

Silver price is approaching the 23.6% Fibonacci retracement (plotted from March 08 low at $19.92 to May 05 high at $26.14) at $26.70 on a four-hour scale. The 50-period Exponential Moving Average (EMA) at $23.91 is providing a cushion to the Silver price.

The Relative Strength Index (RSI) (14) is oscillating in the bullish range in which the 40.00 level is a cushion for the bullish momentum.

Silver four-hour chart