Silver Price Forecast: XAG/USD consolidates below $30 as US PCE inflation looms large

• Silver price stays in a tight range near $29.50 with US PCE inflation under the spotlight.
• US annual core PCE inflation is estimated to have accelerated to 2.7% in July.
• The Fed is almost certain to start reducing interest rates from September.

Silver price (XAG/USD) trades in a tight range near $29.50 in Friday’s European session. The white metal consolidates as investors have sidelined ahead of the United States (US) Personal Consumption Expenditure inflation (PCE) for August, which will be published at 12:30 GMT.

Economists expect that the annual core PCE inflation, which excludes volatile food and energy prices, rose at a higher pace of 2.7% from June’s reading of 2.6%, with monthly figures growing steadily by 0.2%. Though the Fed is widely anticipated to start reducing interest rates in September, the inflation data will influence speculation about the potential rate cut size.

According to the CME FedWatch tool, 30-day Federal Funds Futures pricing data shows that the likelihood of a probability of a 50-basis points (bps) interest rate reduction in September is 33%, while the rest are favoring a cut by 25 bps.

Ahead of the US inflation data, 10-year US Treasury yields edge lower to 3.86%. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades in a tight range near 101.50. The US Dollar (USD) holds Thursday’s recovery move, driven by better-than-preliminary estimated Q2 Gross Domestic Product (GDP) growth. As per the revised estimates, the US economy expanded at a faster pace of 3% than the flash estimate of 2.8% on an annualized basis.

Silver technical analysis

Silver price remains sideways near $29.50, oscillating inside Thursday’s trading range. The white metal continues to take support from the 20-day Exponential Moving Average (EMA), which trades around $29.00.

August 26 high of $30.20 will be the major resistance for the Silver price bulls.

The 14-day Relative Strength Index (RSI) hovers inside the 40.00-60.00 range, suggesting indecisiveness among market participants.

Silver daily chart