Silver Price Analysis: XAG/USD jumps to near $22 despite US PPI rises beyond expectations

• Silver price climbs to near $22.00 after a symmetrical triangle breakout.
• The US Dollar retreats despite the surprisingly hot US PPI report.
• The US inflation outlook turns hotter led by strong US PPI data.

Silver price (XAU/USD) extended upside to near $22.00 after the release of the surprisingly hotter Producer Price Index (PPI) report for September. The US Bureau of Labor Statistics reported that monthly headline PPI rose at a higher pace of 0.5% vs. expectations of 0.4% and core PPI grew by 0.3% against the estimates of 0.2%.

On an annualized basis, the headline PPI accelerated to 2.2%, higher than expectations of 1.6% and the former reading of 2%. The prices of core goods and services at factory gates jumped to 2.7%.

An unexpectedly hotter PPI report indicates that robust consumer spending forced producers to raise prices of goods at factory gates. This indicates that consumer inflation data that is scheduled for Thursday could be stronger and set a hawkish undertone for the Federal Reserve’s (Fed) November monetary policy meeting.

Meanwhile, the US Dollar Index (DXY) looks set for a fresh breakdown below the immediate support of 105.60. The neutral commentary from Fed policymakers over the interest rate outlook has weakened the appeal for the US Dollar. Rate-setters are worried about multi-year high US Treasury yields.

Silver technical analysis

Silver price delivers a breakout of the Symmetrical Triangle chart pattern on an hourly scale, which results in wider ticks and heavy volume. The 50-period Exponential Moving Average (EMA) at $21.82 continues to act as a cushion for the Silver price bulls.

The Relative Strength Index (RSI) (14) shifts into the bullish range of 60.00-80.00, which indicates that the bullish impulse has been triggered.

Silver two-hour chart