Silver price has crashed into a correction as the recent bull run hits a wall and as investors book profits. After peaking at $54.45 in October, XAG has plunged by 12.10% to the current $47.90. This article explores some of the top potential catalysts for the silver price in the near term.
Silver price to react to US consumer inflation report
The first major catalyst for the silver price is the upcoming US consumer inflation data, which comes out later today.
Economists expect the report to show that the headline Consumer Price Index (CPI) rose from 2.9% in August to 3.1%in September as firms adjusted their prices to deal with Donald Trump’s tariffs.
Core inflation, which excludes the volatile food and energy prices, is expected to move from 3.1% in August to 3.2%.
Higher inflation numbers than expected will be bearish for silver as it will put the Federal Reserve between a rock and a hard place. While officials have hinted of cuts, the pace of reduction will be difficult if inflation is in a strong uptrend.
A lower inflation figure than expected, on the other hand, will point to more cuts now that the labor market is struggling. A report released by ADP showed that the economy lost 36,000 jobs in September this year.
Flash PMI numbers
The other main catalyst for the silver price is the flash manufacturing PMI from the United States and other key countries.
A report from the European Union and the UK showed that the manufacturing activity in the regions did well in October. The EU manufacturing PMI rose from 49.8 in September to 50 in October, while in the UK, it moved from 46.2 to 49.6.
Economists expect the report from the US to show the PMI rose in the same period. It will come in at 52.1 from the previous 52.
These numbers are important because silver has a dual role. While it is widely seen as a precious metal, silver is also an industrial metal that does well when the manufacturing sector is thriving.
US and China talks
The other important catalyst for the silver price will come out on Thursday next week when Donald Trump and Xi Jinping meet at the sidelines of the APEC meeting in South Korea.
These talks will be aimed at solving the ongoing trade issues that have intensified in the past few weeks. China has hinted that it may reduce the amount of rare earth materials it ships to the US and other countries.
The two sides have also threatened to implement tariffs on each other. Therefore, a trade deal between the two countries will be good for silver as it will likely lead to more demand.
However, the deal may also be bearish as it will remove the safe-haven appeal that has pushed gold to the highest level on record. Silver often tracks the performance of gold as they are both precious metals.
Federal Reserve interest rate decision
Meanwhile, the Federal Reserve will conclude its two-day meeting on Wednesday next week and deliver its interest rate decision.
Officials, including Jerome Powell, have hinted that the bank will cut interest rates by 0.25% in this meeting as they did in September.
The rate cut will largely depend on the upcoming US consumer inflation data, which will show the extent of Donald Trump’s tariffs.
Silver ETF inflows
The other key catalyst for silver price is the activity in Wall Street. Data shows that the popular iShares Silver ETF (SLV) has had over $1.68 billion in inflows this year, bringing its total assets to over $23 billion.
Most recently, it had inflows in the last three consecutive weeks, with its inflows rising to over $191 million last week. Continued inflows will lead to more demand, which may boost its performance.
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