Silver Under Pressure Ahead of CPI

The price of silver (XAG/USD) faced sharp downward pressure during European trading on Tuesday (Nov 10), falling more than 2% to $52.089, following remarks by Federal Reserve Governor Christopher Waller that opened the door for a larger interest rate hike in December. The statement comes ahead of the release of the U.S. Consumer Price Index (CPI) for October—a key data point closely watched by the market.

Waller indicated that a 50-basis-point interest rate hike could be considered if core inflation for October reaches approximately 0.3% or higher. This signal has intensified market concerns regarding the possibility of a more aggressive monetary policy from the Federal Reserve.

Conversely, economists at Deutsche Bank anticipate more moderate inflationary pressure. They project both headline and core inflation to come in at around 0.2% month-on-month for October, suggesting a potential easing in price pressures compared to the previous period.

Expectations of more aggressive monetary tightening weigh on silver, as the asset does not yield any returns. Waller’s comments also provided support for the U.S. dollar; the DXY index strengthened slightly, moving back above the 101.70 level after previously trading in negative territory.

Newsmaker Analysis: The direction of silver is now heavily dependent on the U.S. CPI results. If inflation proves higher than expected, expectations for an aggressive rate hike could intensify, putting further pressure on silver. Conversely, a lower-than-expected CPI could alleviate pressure stemming from the Fed’s policy stance, potentially creating room for silver to recover. (arl)

Source: Newsmaker.id