Silver Price Forecast: XAG/USD rises to near $65.40 with US inflation in focus

Silver price (XAG/USD) rises to near $65.40 during the Asian trading session on Wednesday, benefiting from expectations surrounding the release of the US Consumer Price Index (CPI) data for July. The headline CPI is projected to have increased by 3.4% annually, a slight deceleration from the 3.5% growth in June. The core CPI, excluding volatile food and energy items, is expected to decelerate to 2.5% YoY from 2.6% in the previous period.

Monthly inflation rates for both headline and core CPI are anticipated to rise by 0.1% and 0.2%, respectively. Investors will be closely monitoring the US inflation data to gain insight into the Federal Reserve's monetary policy outlook. Chair Kevin Warsh cautioned of potential upside inflation risks and emphasized the board's commitment to reducing inflation to the 2% target.

The situation is further complicated by surging oil prices due to restricted global energy supply caused by Middle East conflicts. This limited shipping traffic through the Strait of Hormuz, a vital passage for nearly 20% of global energy supply, may hinder the Silver price's upside potential. CME Group announced that it would enable 24-hour trading in its 100-ounce silver futures contract starting September, following the successful introduction of the 1-ounce Gold futures contract on July 24.

The daily chart shows XAG/USD trading at $65.53, surpassing the 20-day exponential moving average ($61.28) and indicating a bullish near-term bias. Support levels are currently found at the 20-day EMA ($61.28), while resistance lies at the August 10 high ($66.59). Technical analysis suggests that if XAG/USD successfully breaks above the August 10 high, it may continue its advance towards the June 17 high of $71.56.

Silver, a precious metal often used as a store of value and medium of exchange, could attract investors seeking diversification or protection during high-inflation periods. Factors such as geopolitical instability, interest rates, the US Dollar's performance, investment demand, mining supply, and recycling rates can influence Silver prices.

Additionally, dynamics in major economies like the US, China, and India, along with their respective industrial and consumption sectors, can impact Silver price movements.