Silver Price Forecast: XAG/USD trades firmly near $67.60 ahead of US PPI, CPI data

On Thursday, the silver price (XAG/USD) gained ground around $67.60 during the Asian trading session. The white metal was supported by the weakening US Dollar, which was anticipated as the United States Producer Price Index (PPI) and Consumer Price Index (CPI) data for August were released. The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, slipped near 98.75, nearing its lowest point of the past two weeks.

A lower US Dollar made silver an appealing investment option, as it offered a higher risk-reward ratio. Investors would be watching the US PPI for clues about the Federal Reserve's (Fed) monetary policy. The PPI data expectedly showed headline inflation at the factory level rising to 5.3% Year-on-Year (YoY) from 4.7% in July, while the core PPI – excluding volatile food and energy items – was anticipated to rise to 4.6% YoY.

Such indications of accelerating producer-level price pressures could hint at forthcoming Federal Reserve (Fed) interest rate hikes, which might deter investors from non-yielding assets like silver. In the daily chart, XAG/USD was trading at $67.60, with a bullish near-term outlook as it held above the 20-day Exponential Moving Average (EMA) of approximately $66.02.

The Relative Strength Index (RSI) around 56 suggested a positive yet not overbought momentum. Support lay at the 20-day EMA at $66.02, with resistance at the August high of $71.12. Silver is a valuable metal frequently traded by investors, often used as a store of value, medium of exchange, or hedge against inflation. It can be purchased in physical form or through Exchange-Traded Funds tracking its price.

Factors such as geopolitical tensions, economic conditions, and investment demand impact silver prices. As a yieldless asset, silver typically rises with lower interest rates and falls with higher rates. It is also influenced by the US Dollar (USD), as it is priced in dollars (XAG/USD). Silver's price movements can be seen in relation to Gold's movements, given their status as safe-haven assets.

The Gold/Silver ratio can help determine the relative valuation of both metals, with a higher ratio potentially indicating that silver is undervalued compared to gold.