- The price of silver posted its first weekly gain in the past nine weeks, up 9%.
- Falling US Treasury yields undermined the greenback and supported precious metal prices.
- Fed officials are confident of achieving a soft landing while acknowledging that further rate hikes are needed.
Silver price rises for four straight days, topping the $20.00 figure for the first time since July 5, poised to end the week with nearly 9% gains, despite inflation data higher than expected, namely the PCE, the Fed preferred gauge inflation, beating estimates. XAGUSD traders shrugged off the news and held the price of the white metal around $20.25, up 0.11% at the time of writing.
Silver rallies amid bullish sentiment
Global equities continue to trade positively, reflecting bullish sentiment. Meanwhile, the US Department of Commerce revealed that personal consumption spending in June rose 1% month-on-month, better than estimates of 0.9%. On an annual basis, slightly higher by 6.8%, against 6.7% expected by analysts.
Late in the day, the University of Michigan released Consumer Sentiment in its July final reading, which rose 51.5, above estimates. In the same survey, US inflation expectations 5 years ahead rose from 2.8% (preliminary) to 2.9%, although below the June readings.
The crossed threads of Bostic and Waller of the Fed
During the New York session, Atlanta Fed President Raphael Bostic said the Fed “is going to have to do more in terms of interest rate moves.” Bostic said he doesn’t believe the country is in recession after GDP advanced Thursday weaker than expected for the second quarter at -0.9%. In the meantime, Christopher Waller said that “a soft landing is a plausible outcome for the labor market going forward,”
Meanwhile, US bond yields have fallen significantly since Wednesday, after the US Federal Reserve raised rates by 75 basis points. The 10-year US Treasury yield fell from weekly highs of around 2.845% to 2.636%, down 20 basis points, a tailwind for precious metals prices.
It should be noted that the bullish US 2s-10s yield curve inversion flattened during the week, but at the time of writing is still deepening to -0.255%, further fueling expectations for an upcoming recession in the United States.
Consequently, undermined by falling US Treasury yields, the greenback weakened, as seen by the US Dollar Index (DXY). The DXY lost 0.54% in the week, standing at 106,000.
What to watch
Next week, the US economic record will feature the S&P Global and ISM Manufacturing, Services and Composite PMIs. Along with this, the US Nonfarm Payrolls report, alongside the Fed, would dominate the headlines.
Silver (XAGUSD) Major Technical Levels