Silver price forecast: death cross nears ahead of US inflation data

Silver price retreated sharply today, June 10, as concerns about the global economy and inflation continued. XAG fell to $64, down sharply from the year-to-date high of $121. It has slumped to its lowest point since March 24 this year.

Silver price slips amid inflation worries

Silver retreated sharply on Wednesday as concerns about the ceasefire the Middle East escalated. According to Donald Trump, Iran down a US military aircraft that was patrolling the Strait of Hormuz. In response, the US launched attacks against key targets in the country.

While these attacks were limited, Iran responded forcefully, focusing its attacks on US military facilities in the region. As a result, there is a likelihood that the two sides will continue the strikes and counterstrikes in the near term.

At the same time, fighting between Israel and Hezbollah continued, with the former launching attacks against Lebanon, killing at least eight people. These strikes will attract counterstrikes from Iran, which has insisted that Lebanon must be part of the equation. 

These scenarios are working perfectly for Benjamin Netanyahu, who aims to push the US back to the theater. He is also working hard to prevent the US from reaching a deal with Iran. For one, such an agreement would push the US to release billions of dollars to Iran.

All these developments will have a major impact on the global economy, which will impact silver demand over time. Silver has a dual-purpose, in that it is both an industrial and a precious metal. 

US inflation data ahead

The next important catalyst for the price of silver will be the US consumer and producer inflation report that comes out on Wednesday and Thursday. Economists polled by Reuters expect the data to show that consumer prices strengthened substantially in May.

Precisely, the headline CPI is expected to come in at 4.2%, while the PPI is expected to move from 6% in April to 6.4% in May. Strong inflation numbers will push the Federal Reserve to maintain a hawkish tone in the coming months.

The base case is where the Fed leaves interest rates unchanged between 3.50% and 3.75% in Kevin Warsh’s first monetary policy meeting. He will then signal his willingness to hike interest rates, putting him at odds with President Trump, who insists that the bank should slash rates despite the rising inflation.

Silver price technical analysis

XAG price chart | Source: TradingView

The daily chart shows that silver prices have come under intense pressure in the past few days. It has already slumped below the ascending trendline that connects the lowest swings since March this year. Moving below that level confirmed the bearish outlook.

At the same time, it is about to form a death cross pattern, which happens when the 50-day and 200-day moving averages cross each other. It is one of the most common bearish signs in technical analysis. 

The price will likely continue falling in the near term, with the next key support being at $60. A move below that level will point to further downside, potentially towards $50.