Silver Price Forecast: XAG/USD tumbles from $30 as US Dollar gains ground with US Inflation in focus

• Silver price declines from $30.00, weighed down by a mild recovery in the US Dollar.
• Traders divide over the potential Fed rate-cut size in September.
• Silver price finds cushion near key 50-period EMA on a four-hour timeframe.

Silver price (XAG/USD) falls sharply from the psychological resistance of $30.00 in Wednesday’s European session. The white metal tumbles as the US Dollar (USD) recovers some ground after declining to a fresh year-to-date (YTD) low. Historically, buying interest in the US Dollar bodes poorly for the Silver price, given that it makes the Silver price expensive for investors.

The US Dollar (DXY), which tracks the Greenback’s value against six major currencies, delivers a mild recovery move to near 100.85 from 100.50. 10-year US Treasury yields drop to near 3.82%.

A mild recovery in the US Dollar appears to be the outcome of uncertainty among market participants ahead of the United States (US) core Personal Consumption Expenditure inflation (PCE) data for July, which will be published on Friday. The near-term outlook of the US Dollar has remained vulnerable as the Federal Reserve (Fed) is widely anticipated to start reducing interest rates from the September meeting. While trades remain split over the likely rate cut size.

The core PCE price index data, a Federal Reserve’s (Fed) preferred inflation measure, is expected to influence market expectations for the potential size of interest rate cuts in September. Economists estimated that annual underlying inflation accelerated to 2.7% from 2.6% in July, with month-on-month price pressures growing steadily by 0.2%.

Silver technical analysis

Silver price trades in a Rising Channel chart pattern on a four-hour timeframe in which each pullback is considered as a buying opportunity by market participants. The 50-period Exponential Moving Average (EMA) near $29.40 continues to provide support to the Silver price bulls.

The 14-period Relative Strength Index (RSI) falls inside the 40.00-60.00 range, suggesting a consolidation ahead.

Silver four-hour chart