Silver Prices Surge on Strong Inflation Report

Silver prices increased, testing resistance levels. The dollar moved sharply lower, which helped buoy the yellow metal. U.S. Treasury yields were mixed as the 2-year yield moved higher and the 10-year edged lower. Consumer prices rose to a 50-year high as the month-over-month increase was more than expected. The Fed Beige Book was released on Wednesday. Consumer spending grew at a modest pace. Optimism is high, but growth expectations have cooled.

Technical Analysis

On Wednesday, silver prices rallied for a 3^rd consecutive trading day. Resistance is seen near the 50-day moving average at $23.22. Support is seen near the 10-day moving average at 22.81. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are overbought as the fast stochastic is printing a reading of 84, above the overbought trigger level of 80. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line).

Consumer Prices Surge Higher

On Wednesday, the Bureau of Labor Statistics released its Consumer Price Index. Headline inflation at the consumer level was 7% year over year, which was in line with expectations. Monthly figures increased by 0.5%. These figures were the highest level of inflation since 1982. Expectations were for CPI to increase  7% on an annual basis and 0.4% from November.