- Silver price jumps to around $28 on multiple tailwinds.
- Market speculation about big Fed rate cuts in September has diminished significantly.
- Investors are looking to the US CPI for July for further guidance on interest rates.
Silver (XAG/USD) price is up near $28.00 in North American trading on Monday. The white metal is gaining ground amid geopolitical risks and strong speculation that the Federal Reserve (Fed) will start cutting interest rates from the September meeting.
Conflicts between Iran and Israel in the Middle East are expected to widen further as the former is expected to retaliate for the killing of Hamas leader in an Israeli airstrike in Tehran. Silver’s safe haven appeal is improving amid geopolitical uncertainty.
Meanwhile, market speculation about Fed rate cuts in September remains robust, but uncertainty about the size has increased significantly. According to the CME FedWatch tool, 30-day federal funds futures price data show traders see a 46.5% chance of interest rates being cut by 50 basis points (bps) in September. The probability of a 50-bp rate cut has declined significantly from the 85% recorded a week ago.
A sharp decline in the prospects for large interest rate cuts from the Fed has offered some support to the US Dollar (USD) and bond yields. The Dollar Index (DXY), which tracks the value of the Greenback against six major currencies, remains above 103.00. US 10-year Treasury bond yields are hovering near 3.95%.
Looking ahead, investors will focus on the US (US) Consumer Price Index (CPI) data for July, due on Wednesday. The headline and core CPI, which excludes volatile food and energy prices, are expected to have slowed to 2.9% and 3.2%, respectively.
Technical analysis of Silver
Silver price is trading higher near the upper boundary of the Descending Channel formation on the 4-hour time frame. Typically, investors view pullbacks in the mentioned chart pattern as selling opportunities by market participants. The asset is holding below the 200-period exponential moving average (EMA) near $28.76, which suggests that the overall outlook is bullish.
The 14-period Relative Strength Index (RSI) is attempting to break above 60.00. Sustainability above it would enhance Silver’s attractiveness.
Silver four-hour chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
