Silver: XAG/USD consolidates near $32 ahead of China’s stimulus plans, US inflation

LONDON (December 10) Silver price (XAG/USD) trades in a tight range near $32.00 in Tuesday’s North American session. The white metal consolidates as investors await the outcome of China’s closed-door annual central economic conference to be held on Dec 11-12, according to Bloomberg, and the release of the United States (US) Consumer Price Index (CPI), which will be published on Wednesday.

Ahead of China’s conference, Politburo has already shown intentions of providing a strong stimulus to boost consumption and stabilize reality and stock markets. “Will implement more proactive fiscal policy and moderately loose monetary policy,” members of China’s Politburo said on Monday.

Meanwhile, the uncertainty ahead of the release of the US inflation data will also keep the Silver price on the sidelines. Economists expect the annual core CPI -which excludes volatile food and energy prices – to rise steadily by 3.3%. The annual headline CPI is estimated to have grown by 2.7%, faster than the former reading of 2.6%.

The inflation data will influence market expectations for the Federal Reserve (Fed) interest rate action in the policy meeting on December 18. There is an 86% chance that the Fed will reduce interest rates by 25 basis points (bps) to 4.25%-4.50%, according to the CME FedWatch tool.

On the geopolitical front, Israel’s attack on Syria to destroy its military infrastructure in an attempt to prevent Syrian rebels from attacking Israel in the future has escalated tension in the Middle East. Historically, heightened geopolitical tensions improve the safe-haven demand of the Silver price.

FXStreet