Silver Price Forecast: XAG/USD remains subdued near $28 as Fed big rate-cut bets wane

• Silver price remains below $28.00 as expectations for Fed big interest-rate cut diminishes.
• US headline and core inflation decelerated one-tenth to 2.9% and 3.2%, respectively, in July.
• The next trigger for the Silver price will be the monthly US Retail Sales, scheduled for Thursday.

Silver price (XAG/USD) exhibits a subdued performance near $28.00 in Wednesday’s New York session. The white metal faces pressure as market expectations for the Federal Reserve (Fed) big interest-rate cut announcement in September have waned after the release of the United States (US) Consumer Price Index (CPI) report for July.

According to the CME FedWatch tool, the probability for reduction in key borrowing rates by 50 basis points (bps) has declined to 41.5% from 54% in September after the release of the inflation report. However, the data gives a clear signal that the Fed will cut interest rates next month.

The CPI report showed that annual headline and core inflation, which excludes volatile items such as food and energy, decelerated by one-tenth to 2.9% and 3.2%, respectively. The decline in price pressures was broadly in line with market consensus. The month-on-month headline and core inflation also rose by 0.2%, as expected.

Meanwhile, the US Dollar (USD) has dropped further as the inflation data has boosted investors’ confidence that price pressures on track to return to the desired rate of 2%. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, posts fresh weekly low at 103.30.

Going forward, the next trigger for the Silver price will be the US monthly Retail Sales data for July, which will be published on Thursday.

Silver technical forecast

Silver price continues to remain below the 20-day Exponential Moving Average (EMA) near $28.20, suggesting that near-term trend is bearish. While the 200-day EMA near $26.90 continues to provide support to the Silver price bulls.

The major cushion for the Silver price will be the horizontal support plotted from May 5 high at $26.14.

The 14-day Relative Strength Index (RSI) hovers near 40.00. A decisive break below the same will trigger a bearish momentum.

Silver daily chart