Silver has climbed steadily since last Tuesday, supported by hopes for a US-Iran agreement and by a weaker-than-expected US nonfarm payroll report. That momentum now appears to be fading, and today's US CPI report may be needed to extend the rally.
Analyst Giuseppe Dellamotta said the CPI release is important for the Federal Reserve's September FOMC decision and for Fed Chair Warsh's speech at the Jackson Hole symposium. Market attention is focused on the core CPI month-over-month figure, which is expected at 0.2%.
A stronger-than-expected reading could trigger short-term selling and push traders to increase their rate-hike bets. Conversely, if the data is weak or merely matches expectations, it should further reduce the perceived risk of Fed tightening and provide fresh upward momentum for silver.
According to Dellamotta, the report is the key test for the precious metal's recent advance. Whether the rally can continue may depend on the CPI outcome, with the inflation data also carrying weight for the Fed's September policy meeting and the Jackson Hole remarks.
Silver has climbed steadily since last Tuesday, aided by hopes that the US and Iran can reach an agreement and by a weaker-than-expected nonfarm payrolls report. Analyst Giuseppe Dellamotta said the upward momentum now appears to be fading, and today's US CPI report may be needed for the rally to continue.
Dellamotta said the inflation data is critical for the Federal Reserve's September FOMC decision and for Fed Chair Warsh's speech at the Jackson Hole symposium. Market focus will be on the month-over-month core CPI figure, with expectations at 0.2%.
If the data comes in above expectations, silver could face short-term selling as traders add to rate-hike bets. If the report is soft or merely in line, it should lower the risk of further Fed tightening and provide fresh upward momentum for silver, Dellamotta said.
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