Silver (XAGUSD) found temporary support near $31.20 in Thursday’s trading on Wall Street after correcting from a weekly high of $32.30. The white metal was supported and the Dollar declined further after the U.S. Department of Labor reported that individuals claiming jobless benefits for the first time for the week ending May 24 were higher at 219,000 from the estimates of 218,000 and the former reading of 216,000.
Separately, the outcome of a slower US growth rate in the first quarter of the year in the second estimate against preliminary readings has also weighed on the Dollar. The second estimate for the Q1 real GDP shows that the economy expanded at a slower pace of 1.3%, from 1.6% growth recorded in advance estimates.
Impact on Dollar and Silver
The DXY Dollar Index corrected further to 104.76. A downside move in the US Dollar is favourable for dollar-denominated assets such as silver.
Meanwhile, the uncertainty over the near-term outlook of silver remains intact ahead of the U.S. core Personal Consumption Expenditure Price Index (PCE) data for April, which will be published on Friday. Annual and monthly core PCE inflation readings are estimated to have grown steadily by 2.8% and 0.3%, respectively.
The Federal Reserve’s preferred inflation gauge will significantly influence speculation for Fed rate cuts in September. Currently, financial markets expect that the Fed will start reducing interest rates from the last quarter of the year.
Source: OANDA
