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Silver
Source: Newsmaker.id
The price of silver (XAG/USD) strengthened again during Thursday’s trading (October 15), hovering around US$56.50 per troy ounce—a gain of approximately 1.5% during the European session. This movement reflects an attempt by silver to recover following sharp downward pressure in the previous session. The rebound was supported by a weakening US dollar and a decline in US government bond yields.
The US Dollar Index (DXY) stood at approximately 102.10, down about 0.4% during European trading. A weaker dollar makes silver—which is priced in the US currency—relatively more attractive to holders of other currencies. Simultaneously, the yield on the 10-year US Treasury note fell to around 5.09%, its lowest level in three weeks, providing further support for non-yielding assets like silver.
These developments follow the release of US Consumer Price Index (CPI) data for September, which indicated higher-than-expected inflationary pressure. Annual inflation reached 3.7%, while the core CPI rose by 2.6%. Although the data initially fueled expectations of a Federal Reserve interest rate hike, the market now anticipates that the Fed will likely keep rates unchanged at its October meeting.
According to the CME FedWatch tool, the probability of an interest rate hike at the October meeting stands at approximately 27%—a marginal increase from the 22% probability seen before the CPI data was released. This has eased some of the pressure on silver, though the risk of tighter monetary policy remains a concern for the market.
Attention now shifts to the US Producer Price Index (PPI) data for September, due for release on Thursday. This data will provide further insight into inflationary pressures at the producer level and the potential direction of Fed policy. Should the PPI reveal persistent, high price pressures, the US dollar and bond yields could strengthen, potentially capping gains for silver. Conversely, a reading lower than expected could provide room for XAG/USD to continue its recovery.
Newsmaker Analysis: The current strengthening of silver is driven primarily by a weaker dollar and a decline in U.S. yields, which has somewhat eased the pressure stemming from expectations of Federal Reserve interest rate hikes. However, this momentum remains vulnerable to a reversal, as the market awaits U.S. Producer Price Index (PPI) data to confirm whether inflationary pressures persist. Should the PPI come in "hot" (higher than expected), the dollar and yields could strengthen, putting downward pressure on silver; conversely, a lower-than-expected PPI could pave the way for XAG/USD to extend its rebound.
Source: Newsmaker.id