Silver Price Tests Support As Precious Metals Remain Under Pressure

Silver price fell this week to key support area as precious metals remain under pressure. Inflation data in the United States cooled off in July.

With the main event of the trading week (i.e., U.S. inflation data) behind us, investors try to adjust positions based on the outcome. Silver price bounced from $22, a key level that held for the past 12 months. Thus, a break below $22 might come only with a general decline in the precious metals.

The U.S. inflation data for July showed that prices of goods and services did not rise as much as investors have feared. Inflation came out in line with expectations, and core inflation, which does not account for food and energy prices, decelerated.

The release triggered a move higher in the stock market indices and lower in the U.S. dollar. The data pushed the S&P 500 and the Dow Jones index to new record highs, as investors welcomed the slowdown in the inflation rate.

In Europe, the Spanish index flirts with the 9,000, supported on every dip as the European indices follow the lead from the United States. The German Dax is at record highs, too, climbing all the way to 15,820 points, and the CAC 40 in France is at 6,857. Finally, the FTSE 100 index is well above the 7,000 level, trading at 7,212.

Moving forward, conditions favor more of the same – higher stocks both in the United States and Europe. If the U.S. dollar remains weak, the move higher in stocks may even accelerate.

Economic Events to Consider Today

After yesterday’s Consumer Price Index (CPI), it is time to see the Producer Price Index (PPI) release today. This is the inflation rate at the producers’ level and it is typically transmitted to consumers after some time. Hence, if the actual number is bigger than the 0.6% forecast, one should not be surprised to see inflation fears mounting again.

In the meantime, the U.K.'s Preliminary GDP came out in line with expectations. The U.K. economy grew by 4.8% in the second quarter of the year, and by 1% in the last month.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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