PI Global Investments

Silver plunges 4% after US PPI data

Commodities remain under severe selling pressure as the US dollar continues to strengthen, sending the EURUSD pair to parity. As of writing, silver traded some 4% weaker ahead of the US session, dropping to two-year lows at 18.50 USD.

US inflation is not slowing

Analysts were anticipating a minor slowdown in producer prices after yesterday’s CPI shock. They were mistaken. PPI increased by 11.3% year over year in June, much above the +10.8% forecast.

The monthly change came out at 1.1%, above 0.9% expected. This is the 27th straight month of monthly increases in producer prices.

The core inflation slipped from 8.5% to 8.2% yearly, exceeding the 8.1% expected.

Meanwhile, last week, 244,000 Americans submitted their first applications for jobless benefits. Since November 2021, that is the highest level. On the other hand, continuing claims slightly improved from 1.372 million to 1.331 million.

Pre-COVID highs

Silver has just dropped to its pre-covid highs near 18,40 USD, therefore, erasing most of the gains induced by the massive money printing by the Fed. The following support could be at 17.50 USD.

On the upside, silver must close above the strong resistance of 19.45 USD to stabilize in the short term. Unless there is a notable change in the global sentiment, the bear market is expected to continue, and rallies should be sold.

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