Silver Price Forecast: XAG/USD soars to $22.70 as US Dollar weakens, US core PCE data in focus

• Silver price rises sharply to $22.70 amid weakness in the US Dollar.
• Easing geopolitical tensions have impacted safe-haven appeal.
• Sticky US core PCE price index data may postpone Fed’s plans of quitting hawkish stance

Silver price (XAG/USD) recovers sharply to near $22.70 as the US Dollar comes under pressure in the London session on Tuesday. The white metal rises as the US Dollar faces a sell-off due to easing geopolitical tensions.US President Joe Biden is confident of a ceasefire between Israel and Palestine by next week. The US State Department said there has been progress in negotiations for releasing Israeli hostages.

The US Dollar Index, which represents the Greenback’s value against six rival currencies, extends its correction to 103.70.

This week, investors will focus on the United States' core Personal Consumption Expenditure price index (PCE) data for January, which will provide more insights into the timing of the Federal Reserve’s (Fed) rate cuts. Investors anticipate that monthly core PCE rose sharply by 0.4% from 0.2% in December. The annual core PCE data is anticipated to decelerate to 2.8% from the former reading of 2.9%.

The expectations for a rate cut by the Fed will be postponed if the underlying inflation turns out hotter than expectations.

On Monday, Kansas City Fedral Reserve Bank President Jeffrey Schmid said inflation remaining above 2%, tight labor market conditions, and a decent demand outlook indicate that there is no need to rush for rate cuts.

Silver technical analysis

Silver price finds a temporary cushion near the 61.8% Fibbonaci retracement (plotted from February 14 low at $21.93 to February 16 high at $23.50) at $22.53 on an hourly scale. The white metal climbs above the 20-period Exponential Moving Average (EMA), which trades around $22.58.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating consolidation ahead.