FX.co ★ XAG/USD, SILVER

The price of silver (XAG/USD) drops by 2.3% to approach $65.80 during European trading hours today. Selling pressure on the white metal stems from a slight positive bias in the US Dollar (USD), as market participants await the release of US Producer Price Index (PPI) data for August at 12:30 GMT. As of writing, the US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, stands at 99.86. Signals of a USD rebound make silver a risky investment option for traders. The US headline PPI rose 5.3% Year-over-Year (YoY), up from 4.7% in July. Core PPI, which doesn’t take into account volatile food and energy products, is also forecast to be higher, reaching 4.6% YoY from 4.2% reported earlier. The key driver for the Silver price will be the release of US Consumer Price Index (CPI) figures for August, due on Friday. US PPI and CPI data should have a substantial influence on the Fed’s interest rate expectations for the September policy meeting. Commerzbank analysts note that while the recent adjustment of the yield curve was associated with a significant change in expectations for policy, “Fed funds futures markets now price a 60% chance of a 25 bp hike at next week’s meeting.” Analysts also note that the data on “CPI in August released tomorrow is viewed as the key determinant” of whether the Fed goes ahead with the hike or holds off. On the daily chart, XAG/USD trades at $65.80, showing a slight bullish bias as it holds near the 20-day exponential moving average (EMA) at $65.88. The metal is now testing this indicator, which will be crucial for determining its direction in the coming days. A breakout above the EMA would be positive for the formation of the recovery scenario, while a breakdown below the EMA would be negative for bulls. The RSI indicator is now at 52, staying close to neutral levels. This means neither bears nor bulls have dominated the market yet. A breakout above 60 would support the bullish scenario and signal growing buying momentum, while a drop below 50 would signal increased selling pressure. On the positive side, the September 9 peak of $68.33 forms the immediate resistance level. Any sustained move above this level may open the way to the August high of $71.12, which remains the next significant resistance level. Above $71.12, the overall bullish pattern will become even more powerful. On the downside, the August 19 low of $62.19 forms the immediate structural support level. A failure to stay above this level means that the technical picture will shift towards a more serious correction phase.