Silver Price Drops Below $19.00 On Powell Remarks, Sour Sentiment



  • The price of silver is preparing to end the week with losses of 0.64%.
  • Fed Chairman Powell reiterated the US central bank’s goal of lowering inflation, even if it causes “pain for households and businesses”.
  • Upbeat US economic data weighed on prices for the white metal, falling more than $0.30.

The price of silver is falling from around weekly highs around $19.42, falling back below the $19.00 figure after hawkish Fed rhetoric finally took its toll on the market’s misperception of a pivot of the Fed. This, alongside positive economic data from the United States, supported the greenback, a headwind for the price of the white metal. Therefore, XAG/USD is trading at $18.86 per troy ounce at the time of writing.

US stocks plunge after Jerome Powell said the Fed’s main objective was to bring inflation back to its 2% target, even if that spurred slow growth and “pain for households and businesses”. He added that “without price stability, the economy does not work for anyone.”

The US dollar index, an indicator of the dollar’s performance against a basket of six currencies, gains more than 0.30% and is expected to end the week above the 108,800 figure, while bond yields Treasury stocks climbed, led by the short end of the curve, with 2s up two and a half basis points to 3.398%. Meanwhile, the US benchmark 10-year note stands at 3.039%, almost flat.

The Fed’s favorite inflation gauge drops slightly, along with US inflation expectations

Meanwhile, the US Bureau of Economic Analysis reported that US inflation as measured by the PCE slipped to 6.3% year-on-year, lower than estimates of 7.4%. Excluding volatile items like power and energy, the so-called Core PCE slowed to 4.6% YoY, below expectations of 4.7%.

Later, the final version of the University of Michigan’s Consumer Sentiment for August came in at 58.2, revised up from the preliminary report’s 55.1, up from estimates of 55.2. Although a good read, inflation expectations have been the main spotlight. Americans expect inflation to peak at around 4.8% over the next year, compared to 5% forecast. Inflation should peak within five years at around 2.9% against a preliminary 3%.

What to watch

Over the next week, the US Economic Calendar will feature US Consumer Confidence CB, ISM Manufacturing PMI, ADP Payrolls Report and Nonfarm Payrolls.

Silver (XAG/USD) Daily Chart

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