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Silver Prices Surge on Strong Inflation Report

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  • SI=F

Silver prices increased, testing resistance levels. The dollar moved sharply lower, which helped buoy the yellow metal. U.S. Treasury yields were mixed as the 2-year yield moved higher and the 10-year edged lower. Consumer prices rose to a 50-year high as the month-over-month increase was more than expected. The Fed Beige Book was released on Wednesday. Consumer spending grew at a modest pace. Optimism is high, but growth expectations have cooled.

Technical Analysis

On Wednesday, silver prices rallied for a 3rd consecutive trading day. Resistance is seen near the 50-day moving average at $23.22. Support is seen near the 10-day moving average at 22.81. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 84, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Consumer Prices Surge Higher

On Wednesday, the Bureau of Labor Statistics released its Consumer Price Index. Headline inflation at the consumer level was 7% year over year, which was in line with expectations. Monthly figures increased by 0.5%. These figures were the highest level of inflation since 1982. Expectations were for CPI to increase 7% on an annual basis and 0.4% from November.

This article was originally posted on FX Empire

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