Silver slips below $65, but cooling US inflation keeps downside in check

Silver prices slipped below $65 on Thursday, falling 0.64% on the day as investors hesitated to take significant positions before the release of US producer inflation data. Despite the decline, expectations of a more measured monetary policy from the Federal Reserve continue to provide support for the metal. The latest US inflation figures showed a slowdown in price pressure, with the headline Consumer Price Index (CPI) decreasing to 3.4% year-over-year in July from 3.5% in June.

Core CPI, excluding food and energy, also eased to 2.5% from 2.6%, as expected. These figures suggest a reduced need for the Fed to raise interest rates quickly, leading to a 38% chance of a rate hike in September, down from 54% a week prior. As markets reassess the monetary policy outlook, this has put downward pressure on short-term US Treasury yields, which generally benefits non-yielding assets like Silver.

The focus now shifts to the US Producer Price Index (PPI) for July, set for release on Thursday at 12:30 GMT. Easing inflationary pressures could further bolster the case for the Fed maintaining unchanged rates, providing additional support for Silver. On the technical side, XAG/USD is currently at $64.88, trading above the 100-period simple moving average (SMA) at $64.78 and the 200-period SMA at $62.41, indicating a constructive near-term bias.

The Relative Strength Index (RSI) has eased toward the mid-40s, signaling a consolidative phase rather than a bearish trend while price remains supported by these underlying averages. If price falls below the 100-period SMA around $64.78, it could provide initial support ahead of the horizontal floor near $63.00 and deeper structural base at the 200-period SMA at $62.41.

Conversely, to revive the bullish sequence toward fresh highs, XAG/USD would need to reclaim the former uptrend support line around $66.65 and then break above horizontal resistance near $66.80.