Silver prices (XAG/USD) edged up slightly above $28.00 during Monday’s European trading session. The white metal is trading within a narrow range, finding support near $27.70. However, gains are capped as the US Dollar (USD) and bond yields remain robust, reducing market expectations for aggressive Federal Reserve policy easing this month.
The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, surged to approximately 101.70. Meanwhile, 10-year US Treasury yields climbed to 3.75%. Historically, elevated yields on interest-bearing assets tend to limit Silver’s price potential, as they increase the opportunity cost of holding non-yielding assets like Silver.
This strength in the USD and bond yields followed the August release of the US Nonfarm Payrolls (NFP) data, which suggested a healthier labor market than previously indicated by July’s employment figures.
Attention now turns to the US Consumer Price Index (CPI) data for August, set for release on Wednesday. The CPI report is anticipated to show a steady monthly increase of 0.2% in both headline and core CPI, which excludes food and energy prices. On an annual basis, headline CPI is expected to slow to 2.6%, down from July’s 2.9%.
