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David Becker
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Silver prices continue to chop sideways ahead of the Federal Reserve decision on Wednesday. The Fed started a two day meeting, which follows the U.S. retail sales report and producer price report.  PPI was much stronger than expected and shows that inflation is accelerating. Jay Powell’s commentary should describe this information and let the markets know they are tracking this closely. The dollar and U.S. yields moved sideways while gold prices moved higher which weighed on the precious metals complex.

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Technical Analysis

Silver prices are chopping around but the Fed’s decision will likely be an impetus for a sharp move. Resistance is seen near a downward sloping trend line that comes in near $28.35. Support is seen near the 50-day moving average at 26.96The fast stochastic is chopping around between buying and sell signals which also reflects consolidation. The MACD index generated a crossover sell signal. The MACD (moving average convergence divergence) histogram is printing in negative territory with a declining trajectory which points to lower prices.

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Producer Prices Surge

Producer prices rose at their fastest annual clip in nearly 11 years in May. The 6.6% surge in the PPI index was the biggest 12-month rise on record. On a monthly basis, the producer price index rose 0.8%, more than the estimate of 0.5%. Goods inflation continued to be the dominant inflation force, rising 1.5% as opposed to a 0.6% increase in services. Excluding food and energy, PPI rose 5.3%, which also was the biggest increase on record.

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