Silver (XAG/USD) rallied sharply during Thursday’s North American session, nearing the $31.00 mark. The surge followed the release of the US Consumer Price Index (CPI) data for September, which revealed stronger-than-expected inflationary pressures, fueling a wave of buying interest in the precious metal.
The CPI report showed that inflation accelerated due to notable price increases in apparel, as well as rising costs for medical and transportation services. Although the annual headline inflation rate slowed to 2.4% from August’s 2.5%, it was still higher than economists’ forecast of 2.3%, with food price increases offsetting a sharp decline in energy costs. The core CPI, which excludes food and energy, rose to 3.3%, also surpassing expectations and the previous month’s 3.2%.
Despite the stronger inflation figures, silver struggled for clear direction as markets paused to assess the data and adjust their outlook on the Federal Reserve’s policy moves. The CME FedWatch tool indicates a strong probability of a 25 basis point (bps) interest rate cut at the Fed’s November meeting, as inflation concerns remain balanced against the need to support economic growth.
In response to the CPI data, the US Dollar (USD) exhibited volatile movements, adding to uncertainty in the metals market. Looking ahead, investors will be closely watching the US Producer Price Index (PPI) report for September, due for release on Friday, for further clues on inflation trends and the Fed’s next steps.
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