Key Takeaways:
- Silver price is on the rise due to dovish Fedspeak signaling a potential aggressive rate cut in September.
- The likelihood of a 50 basis points rate cut by the Fed has increased to 41.0% according to CME FedWatch Tool.
- Challenges for Silver may arise as Middle-East tensions ease following Israeli forces’ withdrawal from Jenin.
Silver Price Gains Momentum
Silver price (XAG/USD) has been increasing for three consecutive days, reaching around $28.90 per troy ounce during early European trading on Friday. The recent uptrend can be attributed to the dovish comments made by Federal Reserve officials, suggesting the possibility of an aggressive rate cut in September. Lower interest rates could make non-yielding assets like Silver more attractive to investors seeking better returns.
Fed Officials Hint at Interest Rate Policy Changes
Chicago Fed President Austan Goolsbee stated that labor market trends and inflation data justify easing interest-rate policy in the near future. The Federal Reserve’s commitment to lower interest rates has been reflected in market expectations, with a 41.0% likelihood of a 50 basis points rate cut in September, up from 30.0% a week prior. Furthermore, FXStreet’s FedTracker rated Goolsbee’s remarks as neutral, indicating a potential shift in monetary policy.
Impact of Geopolitical Factors on Silver Price
Although Silver has been benefiting from safe-haven flows amidst uncertainties, such as Middle-East tensions, recent developments, like the withdrawal of Israeli forces from Jenin, may impact its prices. The easing of geopolitical tensions could reduce demand for safe-haven assets like Silver, potentially limiting its upward movement.
Silver FAQs
Silver is a precious metal known for its use as a store of value and medium of exchange. Investors often turn to Silver for portfolio diversification, intrinsic value, or inflation hedging. Factors influencing Silver prices include geopolitical instability, interest rate changes, US Dollar performance, investment demand, mining supply, and industrial usage. The dynamics of the global economy can also affect Silver prices, especially in key markets like the US, China, and India. Additionally, Silver prices typically move in line with Gold, with the Gold/Silver ratio being a significant indicator of relative valuation between the two metals.