Silver Falls Below $66 as Dollar Rises

Silver prices fell 2.3% to reach $65.80 during the European session on Thursday. The drop occurred as the US Dollar regained strength against major peers. Traders are currently waiting for the August Producer Price Index data, which releases at 12:30 GMT. The US Dollar Index trades at 99.86, marking a modest recovery from earlier Asian trading hours. This move makes silver a less attractive asset for investors seeking risk-adjusted returns.

Market estimates indicate that headline PPI rose to 5.3% year-over-year. This figure compares to 4.7% in July. Core PPI, which excludes volatile food and energy costs, is expected to hit 4.6% from 4.2%. These numbers provide critical context for the upcoming Consumer Price Index data scheduled for Friday. Both reports will heavily influence expectations for Federal Reserve policy next week.

Fed Rate Hike Expectations Rise

Federal Reserve funds futures markets price a 60% probability of a 25 basis point rate hike at the next meeting. This shift reflects a notable change in policy expectations along the yield curve. Analysts at Commerzbank identify the August CPI data as the decisive input for this decision. The central bank will determine whether to deliver another increase or extend its current pause. This uncertainty directly impacts the pricing of yieldless assets like silver.

According to GN auto markets/commodities: silver prices, the metal remains underpinned by short-term trend support. The price hovers just above the 20-day exponential moving average at $65.88. The Relative Strength Index sits around 52, indicating neutral momentum. Upside movement remains tentative rather than impulsive. The technical structure suggests a modest bullish bias despite the recent decline.

Key Technical Levels For Silver

The critical support level for silver is the August 19 low at $62.19. A break below this point would signal further downside risk. On the upside, the September 9 high at $68.33 acts as the primary hurdle. If silver clears this level, the next major resistance is the August high at $71.12. Traders are watching these boundaries closely for directional cues.

Silver serves as a store of value and a portfolio diversifier. It is also a key industrial input for electronics and solar energy. Demand in these sectors influences price dynamics alongside macroeconomic factors. As a yieldless asset, silver tends to rise when interest rates fall. However, a strong US Dollar typically suppresses its price. The interplay between these factors drives current market movements.