Silver (XAG/USD) is holding steady around $60.30 during Tuesday's European trading session. The market is in a holding pattern as investors await the US Consumer Price Index (CPI) data for September, set to be released on Wednesday. The upcoming inflation report is expected to influence expectations for the Federal Reserve's interest rate decisions.
Strategists at OCBC note that markets currently anticipate the Fed to keep rates unchanged in October but implement a 25 basis point hike in December. The key question, they argue, is whether the CPI data could alter this timeline by accelerating expectations for further tightening. OCBC forecasts firmer headline inflation due to rising energy costs but expects core inflation to remain stable. A moderation in core inflation could lead markets to reduce expectations for additional Fed tightening.
Technical analysis shows that silver has been confined to a narrow range between $58.50 and $62.09 for weeks, maintaining a bearish short-term outlook. The metal is trading below its 20-period Exponential Moving Average (EMA) at $61.85, suggesting that upside attempts are capped. The Relative Strength Index (RSI) stands at 41.94, indicating persistent but not extreme selling pressure.
On the upside, breaking above the 20-period EMA at $61.85 would be necessary to ease immediate downside risks and allow a recovery. On the downside, the RSI's position near 42 implies support, and a deeper decline could lead to a corrective bounce if bears overextend the move.