Silver (XAG) Daily Forecast: $29 Hold? Bull Breakout or Bounce?

Additionally, persistent geopolitical tensions in the Middle East and renewed political uncertainty in Europe are other key factors bolstering the silver price.

Fed Expectations and Economic Data Influence Silver Prices

Despite the Federal Reserve projecting only one rate cut in 2024, markets are pricing in a greater chance of an earlier rate-cutting cycle, possibly starting in September, due to signs of easing inflation in the US. This has lowered US Treasury bond yields to their lowest levels since April, weakening the Greenback and providing support to silver.

Wednesday’s Consumer Price Index (CPI) reported no change in May, the first time since last June, with annual inflation easing slightly to 3.3% from April’s 3.4%. Additionally, the US Department of Labor noted a higher-than-expected rise in initial jobless claims to 242,000 last week from 229,000 the previous week.

Overall, the expectation of earlier Fed rate cuts and easing inflation pressures have reduced US Treasury bond yields, weakening the USD and supporting silver prices as a USD-denominated commodity.

Short-term Forecast

Silver (XAG/USD) halted its previous-day decline, gaining positive traction around $29.07, with an intra-day high of $29.13. The uptick is mainly due to the weaker US dollar amid market sentiment and expectations of potential Federal Reserve rate cuts as soon as September.