Silver prices echo the dynamics of gold ones during recent trading sessions. Strong U.S. inflation data created an environment for precious metals to decline. On Friday, the U.S. Department of Commerce reported that the core Personal Consumption Expenditures Price Index (PCE) was 4.7% in January, compared to December's reading of 4.6% and the consensus forecast of 4.3%. The U.S. dollar saw its biggest weekly jump since September 2022, which had a negative impact on commodities. The dollar hit its highest level in seven weeks amid concerns over the Fed's hawkish policy.
On Friday, Cleveland Fed President Loretta Mester said that risks of higher inflation remain. Further rate hikes are necessary because of the rising rates of inflation. According to Philip Jefferson, higher wages in the U.S. are pushing prices higher. This, in its turn, is preventing reaching the 2% inflation target set by the Fed.
Fundamental external background remains negative for precious metal prices.
Declining gold and silver prices are boosting demand in India and China, according to analysts. Despite strong demand for gold in Asia, supply is still limited as deliveries have been reduced in anticipation of a possible import tax cut. Jewelers were waiting for a lower import tax rate and suspended their gold purchases. However, instead of the reduction, India has raised the import duties on both gold and silver.
Higher duties might additionally suppress demand for the precious metals.
According to the technical analysis, silver prices reached the downside target of 0.5 Fibonacci of the entire growth wave. At the moment, this support was broken down, and the next downside target is 0.618. Right now, the support for the price is the level of the last year's low of mid-November, and its penetration would mean decline to the target at around $20.3. This level will be our downside target. A stop-loss will be placed in case of growth to the level of 0.5 Fibonacci, which corresponds to the price of $21.1.
The silver price decreasing:
Take profit — 20.3
Stop-loss — 21.1