• Silver price remains under pressure near $29.00 with a focus on the US CPI and the Fed policy outcome.
• The Fed is expected to maintain interest rates steady with hawkish guidance.
• Investors see the Fed cutting interest rates only once this year.

Silver price (XAG/USD) extends its downside to near the crucial support of $29.00 in Tuesday’s European session. The white metal weakens as the US Dollar (USD) and bond yields have performed strongly across the board due to a sharp decline in market expectations that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.

Investors see the Fed lowering its key borrowing rates only once this year as fears for price pressures remaining persistent have deepened. The US Dollar Index (DXY) turns sideways after printing a fresh four-week high near 105.40. 10-year US Treasury yields have edged down to 4.44% in the London session but hold its strong recovery from 4.27%.

The next major triggers for the Silver price will be the May United States Consumer Price Index (CPI) data and the Fed’s interest rate decision. The CPI data will indicate whether the disinflation process is intact or has stalled. In the first quarter, the CPI report indicated that price pressures were higher than expected, while in April, they declined expectedly.

Meanwhile, the Fed’s decision is expected to remain status quo for the seventh time in a row as policymakers lack evidence that inflation is on course to return to the desired rate of 2%. Investors will focus on the Fed’s dot plot, which will indicate where policymakers see the federal fund rate heading. The CME FedWatch tool shows that 30-day Fed Fund Rate pricing data suggest only one rate-cut move this year.

Silver technical analysis

Silver price trades close to the neckline of the Head and Shoulder (H&S) chart pattern, which is marked from May 24 low at $30.05 on a four-hour timeframe. A breakdown of the above-mentioned chart pattern results in a bearish reversal.

The near-term outlook remains uncertain after a bearish crossover of 20 and 50-day Exponential Moving Averages (EMAs) near $30.50.

The 14-period Relative Strength Index (RSI) has slipped into the 20.00-40.00 range, suggesting that the momentum has leaned toward the downside.

Silver four-hour chart

(This story was corrected on June 11 at 10:55 GMT to say, in the technical analysis section, that the neckline of the Head and Shoulders chart pattern is marked from the May 24 low at $30.05, not from the April 9 high at 1.0885.)

XAU/USD Current price: $2,312.55

• Financial markets trade on sentiment after the European Parliament election.
• The United States Federal Reserve takes centre stage in a data-packed week.
• XAU/USD bounced from below $2,300, but a firmer recovery is out of the picture.

XAU/USD consolidates its recent losses around the $2,300 threshold on Monday, as fears fuel demand for the US Dollar and Gold. The pair plummeted on Friday, initially hit by news that the People’s Bank of China (PBoC) paused gold purchases in May after 18 months of buying and later amid resurgent US Dollar demand on the back of a stronger-than-anticipated Nonfarm Payrolls (NFP) report.

Over the weekend, the focus was on the European Parliament election, which saw a significant increase in votes for far-right parties, pushing financial markets into risk-averse mode at the beginning of the week. XAU/USD posted an intraday low of $2,287.65, holding above Friday’s bottom. European indexes settled in the red, although the better tone of Wall Street has helped XAU/USD recover some ground, now trading at around$2,310. Somehow, fears receded, although caution prevails.

The macroeconomic calendar had nothing relevant to offer, with the focus on first-tier events scheduled for later this week. Next Wednesday, the United States (US) will start the day by publishing the May Consumer Price Index (CPI), while the Federal Reserve (Fed) will announce its decision on monetary policy and fresh economic projections later in the day. The Bank of Japan (BoJ) monetary policy decision is also scheduled for this week, alongside monthly employment data from the United Kingdom (UK) and Australia.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows its trading at the lower end of Friday’s range, with the risk still skewed to the downside. Technical indicators are bouncing just modestly from near oversold readings, without enough strength to anticipate another leg higher. At the same time, XAU/USD develops well below a flat 20 Simple Moving Average (SMA) while the longer ones maintain their upward slopes far below the current level.

In the near term, and according to the 4-hour chart, the technical picture is quite similar. Technical indicators are correcting oversold conditions but remain well into negative territory and with limited upward strength. At the same time, XAU/USD develops below all its moving averages, with the 20 SMA gaining downward traction below the longer ones, limiting the chances of a steeper recovery.

Support levels: 2,300.00 2,286.60 2,272.90

Resistance levels: 2,315.50 2,328.40 2,342.35

Two Breakouts Confirm Strength

Today’s pullback follows three up days culminating in a long-term trendline breakout confirmed by last week’s close above the line. In addition, there was a bull breakout of a shorter-term pennant trend continuation pattern last week as well. The breakouts just began, so there should be more upside to go. However, how the price of natural gas behaves around key price levels will provide clues. All breakouts can fail and some follow through faster than others.

Watch Behavior Around Support

The pennant breakout should help maintain upward momentum (faster) as the long-term breakout of the trendline progresses (slower). Pullbacks should recover quickly and not retrace too deep. The area around support of the declining trendline is key for the bullish outlook to be maintained in the near term. However, if there is a daily close below the trendline, the risk of a deeper retracement rises.

There are several price areas to watch for support below the trendline. First, there is the top boundary line of the pennant. Thursday’s low is at 2.79 and be used as a guide as well since it bounced off support of the top boundary line. Further down is the 20-Day MA at 2.64 currently, and the 200-Day MA at 2.46.

Upside Targets Start with 3.18

On the upside, there is a target derived from the bull pennant up at 3.78. It remains to be seen whether that target will eventually be reached, and it could take a little time. Interim price targets include the swing high from January at 3.39 and the 2023 peak at 3.64. There is also the completion of an 88.6% Fibonacci retracement at 3.18.

For a look at all of today’s economic events, check out our economic calendar.

Analysts’ Projections

Goldman Sachs analysts forecast Brent crude to rise to $86 per barrel in the third quarter. They cite robust summer transport demand as a key factor, projecting a third-quarter deficit of 1.3 million barrels per day (bpd). Additionally, energy consultancy FGE anticipates oil prices reaching the mid-$80s in the third quarter. These projections suggest that the market’s current pessimism might be overdone, especially with expected declines in oil inventories in the coming weeks.

OPEC+ Production Concerns

Despite ongoing OPEC+ production cuts, oil inventories have been rising. The latest data showed an increase in U.S. crude and gasoline stocks. Concerns are mounting over OPEC+’s plan to unwind some production cuts from October, potentially adding to the rising supply and exerting downward pressure on prices. The recent OPEC+ meeting has contributed to a bearish sentiment, with crude prices falling last week despite reassurances from key members like Saudi Arabia and Russia.

Impact of the Strong Dollar

The strengthening dollar has also weighed on oil prices. The dollar rallied following a robust U.S. jobs report, leading investors to reassess the likelihood of near-term interest rate cuts. A stronger dollar makes oil more expensive for holders of other currencies, dampening demand. The euro, conversely, weakened after French President Emmanuel Macron called for a snap parliamentary election, further bolstering the dollar.

Mixed Economic Signals

Various economic indicators have sent mixed signals to the oil market. The European Central Bank’s recent interest rate cut, the first since 2019, aims to address uncertain inflation, though high borrowing costs could slow economic activity and reduce oil demand. Meanwhile, China’s latest trade data showed a drop in oil imports despite strong export growth, highlighting ongoing demand concerns.

Market Forecast: Cautiously Bullish

Given the expected rise in summer transport demand and projected inventory declines, the short-term outlook for oil prices appears cautiously bullish. However, the market’s response will depend heavily on concrete signals of tightening from inventory data and the impact of the strong dollar. Traders should watch for further updates on OPEC+ production plans and global economic developments to gauge the market’s direction.

Technical Analysis

XAU/USD Current price: $2,312.55

• Financial markets trade on sentiment after the European Parliament election.
• The United States Federal Reserve takes centre stage in a data-packed week.
• XAU/USD bounced from below $2,300, but a firmer recovery is out of the picture.

XAU/USD consolidates its recent losses around the $2,300 threshold on Monday, as fears fuel demand for the US Dollar and Gold. The pair plummeted on Friday, initially hit by news that the People’s Bank of China (PBoC) paused gold purchases in May after 18 months of buying and later amid resurgent US Dollar demand on the back of a stronger-than-anticipated Nonfarm Payrolls (NFP) report.

Over the weekend, the focus was on the European Parliament election, which saw a significant increase in votes for far-right parties, pushing financial markets into risk-averse mode at the beginning of the week. XAU/USD posted an intraday low of $2,287.65, holding above Friday’s bottom. European indexes settled in the red, although the better tone of Wall Street has helped XAU/USD recover some ground, now trading at around$2,310. Somehow, fears receded, although caution prevails.

The macroeconomic calendar had nothing relevant to offer, with the focus on first-tier events scheduled for later this week. Next Wednesday, the United States (US) will start the day by publishing the May Consumer Price Index (CPI), while the Federal Reserve (Fed) will announce its decision on monetary policy and fresh economic projections later in the day. The Bank of Japan (BoJ) monetary policy decision is also scheduled for this week, alongside monthly employment data from the United Kingdom (UK) and Australia.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows its trading at the lower end of Friday’s range, with the risk still skewed to the downside. Technical indicators are bouncing just modestly from near oversold readings, without enough strength to anticipate another leg higher. At the same time, XAU/USD develops well below a flat 20 Simple Moving Average (SMA) while the longer ones maintain their upward slopes far below the current level.

In the near term, and according to the 4-hour chart, the technical picture is quite similar. Technical indicators are correcting oversold conditions but remain well into negative territory and with limited upward strength. At the same time, XAU/USD develops below all its moving averages, with the 20 SMA gaining downward traction below the longer ones, limiting the chances of a steeper recovery.

Support levels: 2,300.00 2,286.60 2,272.90

Resistance levels: 2,315.50 2,328.40 2,342.35

XAU/USD Current price: $2,312.55

• Financial markets trade on sentiment after the European Parliament election.
• The United States Federal Reserve takes centre stage in a data-packed week.
• XAU/USD bounced from below $2,300, but a firmer recovery is out of the picture.

XAU/USD consolidates its recent losses around the $2,300 threshold on Monday, as fears fuel demand for the US Dollar and Gold. The pair plummeted on Friday, initially hit by news that the People’s Bank of China (PBoC) paused gold purchases in May after 18 months of buying and later amid resurgent US Dollar demand on the back of a stronger-than-anticipated Nonfarm Payrolls (NFP) report.

Over the weekend, the focus was on the European Parliament election, which saw a significant increase in votes for far-right parties, pushing financial markets into risk-averse mode at the beginning of the week. XAU/USD posted an intraday low of $2,287.65, holding above Friday’s bottom. European indexes settled in the red, although the better tone of Wall Street has helped XAU/USD recover some ground, now trading at around$2,310. Somehow, fears receded, although caution prevails.

The macroeconomic calendar had nothing relevant to offer, with the focus on first-tier events scheduled for later this week. Next Wednesday, the United States (US) will start the day by publishing the May Consumer Price Index (CPI), while the Federal Reserve (Fed) will announce its decision on monetary policy and fresh economic projections later in the day. The Bank of Japan (BoJ) monetary policy decision is also scheduled for this week, alongside monthly employment data from the United Kingdom (UK) and Australia.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows its trading at the lower end of Friday’s range, with the risk still skewed to the downside. Technical indicators are bouncing just modestly from near oversold readings, without enough strength to anticipate another leg higher. At the same time, XAU/USD develops well below a flat 20 Simple Moving Average (SMA) while the longer ones maintain their upward slopes far below the current level.

In the near term, and according to the 4-hour chart, the technical picture is quite similar. Technical indicators are correcting oversold conditions but remain well into negative territory and with limited upward strength. At the same time, XAU/USD develops below all its moving averages, with the 20 SMA gaining downward traction below the longer ones, limiting the chances of a steeper recovery.

Support levels: 2,300.00 2,286.60 2,272.90

Resistance levels: 2,315.50 2,328.40 2,342.35

Drivers are getting a bit of a break at the gas station: The national average price of regular unleaded has slipped to $3.47 per gallon, after peaking at almost $3.70 earlier this year. Fuel demand has been a bit weaker than normal for this time of year, and crude oil prices have pulled back, leading to lower costs at the retail level. That’s good news for the summer travel season and for tamping down overall inflation.