Cooling PCE Fails to Counter Hawkish Pressure as Silver Tests $60 Support

Summary:

The US core PCE price index for August came in surprisingly below expectations, hitting a half-year low. While theoretically bullish for precious metals, dense hawkish signals from Federal Reserve officials completely offset the positive effect of cooling inflation, causing silver to spike and reverse lower to close in the red.

BUY XAGUSD

EXP

TRADING

60.498

Entry Price

64.000

59.200

60.846 +0.435 +0.72%

0.0

Pips

Flat

59.200

Exit Price

60.498

Entry Price

64.000

Fundamental Analysis

Silver/USD opened higher during the intraday session and is currently trading around 60.95. Overnight (September 30) price action showed that although the US core PCE price index for August came in surprisingly below expectations to touch a six-month low—which should theoretically benefit precious metals—dense hawkish signals released by Fed officials fully negated the bullish impact of cooling inflation, causing silver to pull back after an initial rally and close lower.

On the fundamental front, monetary policy expectations remain the core variable driving silver prices. Federal Reserve official Neel Kashkari explicitly stated that he expects one more rate hike this year and potential further rate increases in 2027. This aggressive stance reinforced market expectations that interest rates will remain higher for longer, boosting the US Dollar Index to around 101.47 and directly pressuring dollar-denominated silver. Meanwhile, the US Treasury Department announced plans to buy back up to $6 billion in 10-to-20-year Treasuries during liquidity buyback operations on October 1. While aimed at supporting market liquidity, this move sparked investor concern over long-term Treasury supply and yield volatility, further exacerbating choppiness across precious metals markets.

Additionally, despite ongoing uncertainty in the Middle East, Donald Trump's remarks suggesting a quick end to a potential war with Iran, along with the withdrawal of US troops from Iraq, somewhat diluted geopolitical safe-haven buying.

From a positioning and capital flow perspective, SLV silver ETF holdings dropped by 43.54 metric tons to 15,352 tons on September 30, signaling an outflow of investment capital. After reaching a peak of $68.35 in early September, silver closed the period with a long upper shadow on a large bearish candle, highlighting heavy overhead selling pressure and indicating a need for further downside testing in October.

In summary, silver remains constrained in the short term by dollar strength and hawkish monetary policy. Investors should closely monitor price behavior around the $60 mark and the potential impact of upcoming US employment data.

Technical Analysis

On the 4-hour chart, Silver/USD is trading within a downward regression channel, reflecting a choppy downtrend following its pullback from high levels. After breaking below the 0.618 Fibonacci retracement level (around 64.389) and the dual-tunnel system, price accelerated lower and is currently retesting a major higher-timeframe horizontal support at 60.001 (near the psychological round number and lower channel boundary), showing initial signs of attempting to stabilize for a bounce. Key downside support sits near the 60.001 round handle; a breakdown below this pivot would invalidate the channel structure and open the door for a deeper drop toward 58.198 or lower. Key upside resistance rests in the 64.05–64.55 region, where the inner fast tunnel and outer slow tunnel cluster together alongside the 0.618 Fibonacci level (64.389), forming a strong confluence retest resistance band following the breakdown. With Silver/USD holding just above key support at 60.001, whether it can complete a shakeout near the lower channel rail to initiate a rebound requires further observation.

In terms of technical indicators, within the dual-tunnel framework, the inner fast tunnel formed by EMA 144 (64.0532) and EMA 166 (64.1357) crossed below the outer slow tunnel formed by EMA 288 (64.3732) and EMA 338 (64.5551) to form a death cross. Both tunnels are sloping downward, signaling that short-to-medium-term bears remain in control. However, the current price (61.212) has fallen deeply below the dual-tunnel system and stretched significantly away from the moving averages, indicating strong short-term demand for an overextended mean-reversion move. Given that price has reached the confluence support zone where the lower channel rail meets the major horizontal neckline at 60.001, the probability is high that Silver/USD will base and stabilize within the 60.000–60.500 area to launch a technical corrective rebound. Cooling PCE Fails to Counter Hawkish Pressure as Silver Tests $60 Support_1

Cooling PCE Fails to Counter Hawkish Pressure as Silver Tests $60 Support_1

Trading Recommendations

Direction: Buy / Long

Entry: 60.500

Target: 64.000

Stop Loss: 59.200

Support Levels: 60.001, 59.230, 58.198

Resistance Levels: 62.325, 64.053, 64.389

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