The price of silver (XAG/USD) is on the rise for the second consecutive day, reaching around $29.50 per troy ounce during Asian trading hours on Friday. This non-yielding asset is benefiting from a lower opportunity cost as the likelihood of a US Federal Reserve interest rate cut in September increases.
Investors are eagerly awaiting the release of July’s US Personal Consumption Expenditure (PCE) Price Index later in the North American session, looking for clues about the future direction of US interest rates.
Federal Reserve Atlanta President Raphael Bostic, known for his hawkish stance on the FOMC, hinted on Thursday that it may be time to consider rate cuts due to cooling inflation and higher-than-expected unemployment rates. However, he is waiting for confirmation from upcoming employment and inflation reports before the Fed’s September meeting.
On the geopolitical front, safe-haven silver may face challenges as Israel’s military and the Palestinian militant group Hamas have agreed to three-day pauses in fighting in Gaza. These pauses are to allow for the vaccination of 640,000 children against polio, according to a senior WHO official.
In other news, Israeli troops killed a local commander of the Iranian-backed Islamic Jihad movement and four other militants in the West Bank on Thursday. This incident marks a significant escalation in the ongoing conflict in the region.
Silver FAQs
- Silver is a precious metal often traded by investors for its value and potential as a hedge.
- Factors influencing silver prices include geopolitical instability, interest rates, and the strength of the US Dollar.
- Silver is widely used in industries such as electronics and solar energy, affecting its demand and price.
- Silver prices tend to follow gold prices, with the Gold/Silver ratio helping to determine relative valuations.
Overall, the rising silver price, coupled with expectations of a Fed rate cut, indicates a shifting landscape in the financial markets. Investors should keep a close eye on economic indicators and geopolitical developments to make informed decisions about their portfolios.