Silver Price Prediction – Prices Slide Following Robust Core CPI

Silver prices moved lower in the wake of the CPI reported by the U.S.  Labor Department. Inflation rose more than expected on the head and core levels, helping to buoy U.S. Treasury yields which buoyed the greenback. The rally in the dollar generated headwinds for commodities. Copper prices lower but also capping any upward movement in silver prices.

Technical analysis

Silver prices moved lower on Tuesday pushing back down through support which is now resistance near the 10-day moving average of 26.16. Additional resistance is seen near the 50-day moving average at 27.04. Support is seen near an upward sloping trend line that comes in near 25.75.  The daily chart appears to have formed a triple top which will generate headwinds for prices. Short-term momentum flip-flopped and turned negative as the fast stochastic generated a crossover sell signal. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

Core CPI Rise More than Anticipated

Consumer inflation rose in June at its fastest pace in nearly 13 years. The consumer price index increased 5.4% year over year the most significant jump since August 2008. Expectations were for a 5% gain. Month over month headline and core prices rose 0.9% against 0.5% estimates. Core CPI, which removes food and energy rose 4.5%, the sharpest move for that measure since September 1991 and well above the estimate of 3.8%. This led to a surge in short-term yields which buoyed the dollar.