Silver Pulls Back Ahead of US PCE Data, But Underlying Support Remains

Silver prices extended their pullback on Tuesday, trading near $67.68 per ounce, down over 1% on the day. Markets turned cautious ahead of key US inflation data, with some longs taking profits, dragging prices off recent highs.

**PCE Data in Focus for the Short Term**

Friday's release of the US September core Personal Consumption Expenditures (PCE) price index will be the last major inflation gauge before the Federal Reserve's December policy meeting. Markets broadly expect a 0.2% month-over-month increase, flat with August's reading. Any deviation could significantly shift expectations for the Fed's policy stance. Earlier, the resilience shown in US consumption data has made the Fed more cautious in weighing inflation against labor market risks.

**Technical Support Remains Solid**

Despite short-term pressure on silver, technical charts show the broader uptrend remains intact. The metal had previously broken above the key resistance level of $54.4 and accelerated higher, hitting multi-year peaks. The current pullback is largely seen as a technical consolidation after overbought conditions, with the Relative Strength Index (RSI) having entered overbought territory, suggesting near-term correction needs. Market analysts believe silver is likely to find support near prior highs, with the medium-to-long-term uptrend structure staying intact.

**Market Sentiment and Macro Backdrop**

Recent US economic data has been mixed, with slowing retail sales and declining consumer confidence having earlier boosted safe-haven demand for precious metals, with silver surging 11% in the prior week. Market focus has now shifted to inflation dynamics and business activity indicators, which will be key to major central banks' monetary policy decisions before year-end. Investors are assessing the inflation outlook and the rate path to gauge the next move for precious metals.