Silver Price Analysis: XAG/USD remains subdued below $23 on stubborn US core PCE report

• Silver price remains depressed below $23.00 despite sticky US core PCE data.
• Higher US bond yields keep the Silver price on the backfoot.
• Major growth to Q3 GDP was contributed by robust consumer spending.

Silver price (XAG/USD) witnesses some selling pressure as the United States Bureau of Economic Analysis (BEA) has reported that the core Personal Consumption Expenditure (PCE) price index for September remained in line with expectations.

Federal Reserve’s (Fed) preferred inflation gauge rose at a higher pace of 0.3% as expected against a nominal increase of 0.1%, recorded in August. The annual core PCE inflation data decelerated to 3.7%, in line with estimates, from the August reading of 3.9%.

The US Dollar Index (DXY) drops sharply as core PCE inflation is consistently declining while the Silver prices remain under pressure due to a sharp rebound in 10-year US Treasury yields to near 4.87%. Going forward, investors will shift focus to the Fed’s monetary policy.

As per the CME Fedwatch tool, traders see the Fed keeping interest rates unchanged at 5.25-5.50% almost certain. The odds of one more interest rate increase in any of the two remaining monetary policy meetings in 2023 have dipped sharply to 20%.

Fed policymakers hope that high US Treasury yields are sufficient to dent overall spending and investment. Cleveland Fed Bank President Loretta Mester said last week that higher bond yields are equivalent to one interest rate hike of 25 basis points (bps).

The blockbuster Q3 Gross Domestic Product (GDP) report, released on Thursday, indicated that investments by businesses were dipped for the first time in two years due to higher borrowing costs. However, major growth was contributed by robust consumer spending and higher residential investment.

Silver technical analysis

Silver price continues to defend the support zone plotted in a range of $22.40-22.56 on a two-hour scale. The 50-period Exponential Moving Average (EMA) continues to act as a barricade for the Silver price bulls.

The Relative Strength Index (RSI) (14) oscillates in the 40.00-60.00 range, which indicates that investors await a potential trigger for building fresh positions.

Silver two-hour chart