Silver (XAG/USD) experienced a slight sell-off after reaching a two-year high near $28.00 early Monday. Despite rising US Treasury yields following Friday’s strong Nonfarm Payrolls (NFP) report, near-term demand for the precious metal remains robust.
NFP Report Fuels Inflation Concerns, Impact on Fed Outlook
The robust US jobs data has reduced expectations of a June Federal Reserve (Fed) rate cut, as persistent labor demand and strong wage growth could fuel consumer spending and keep inflation elevated. 10-year US Treasury yields climbed to 4.43%.
Fed Governor Michelle Bowman reinforced this sentiment, stating that a policy rate reduction remains inappropriate and that she sees upside risks to inflation. Fed policymakers have consistently stressed the need for sustained positive inflation data before considering rate cuts.
Focus Shifts to US CPI Data, Impact on Silver
The US Dollar Index (DXY) retreated marginally to 104.24 but remains near Friday’s range. Market attention now turns to Wednesday’s release of March Consumer Price Index (CPI) data. A larger-than-expected decline in core CPI (excluding volatile food and energy prices), forecast at 3.7% versus February’s 3.8%, could reignite Fed rate cut expectations for June, boosting Silver.
Technical Analysis: Silver Breakout Signals Upside Potential
Silver’s recent breakout from an Ascending Triangle pattern on the daily timeframe suggests further upside. This pattern is characterized by contracting volatility followed by a decisive, high-volume breakout. The pattern’s former resistance near $26.13 now acts as key support.
The advancing 20-day Exponential Moving Average (EMA) near $25.50 further bolsters near-term bullish sentiment. The 14-period Relative Strength Index (RSI) remains within the bullish 60.00-80.00 range, confirming strong upward momentum.