The price of Silver (XAG/USD) is currently hovering around $28.30 per troy ounce as traders exercise caution in anticipation of the US inflation report set to be unveiled on Wednesday. This data release is crucial as it will provide insights into the potential scale of the Federal Reserve’s interest rate cut in September, which could have a significant impact on non-yielding assets like Silver.
Last week, the US labor data created uncertainty regarding the magnitude of a Fed interest rate cut. While the Nonfarm Payrolls (NFP) added 142,000 jobs in August, slightly below the forecast of 160,000, it was an improvement from the previous month. Additionally, the Unemployment Rate dropped to 4.2%, as expected, further adding to the speculation surrounding the Fed’s next move.
According to the CME FedWatch Tool, the market is anticipating at least a 25 basis point rate cut by the Federal Reserve in September. The likelihood of a 50 bps rate cut has slightly decreased to 29.0%, indicating a shift in market sentiment.
Chicago Fed President Austan Goolsbee’s recent comments align with the market’s expectation of an impending policy rate adjustment by the US central bank. This sentiment was rated as dovish by FXStreet’s FedTracker, further supporting the prediction of a rate cut in the near future.
Silver FAQs
Silver is a precious metal that is highly traded among investors for its intrinsic value and potential hedging properties. It can be purchased in physical form or traded through Exchange Traded Funds to track its price on international markets. The price of Silver is influenced by various factors such as geopolitical instability, interest rates, US Dollar performance, investment demand, and industrial usage in sectors like electronics and solar energy.
Investors often compare Silver to Gold, as both metals are considered safe-haven assets. The Gold/Silver ratio can help determine the relative valuation between the two metals, with a high ratio indicating potential undervaluation of Silver compared to Gold, and vice versa.