Silver (XAG/USD) fell below the lower end of Monday’s trading range, reaching approximately $29.40 during Tuesday’s New York session. The precious metal is experiencing selling pressure due to a strong rebound in the US Dollar (USD), which had corrected on Monday. The US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, has rebounded from 105.40.
US Dollar Strengthens Amid Interest Rate Speculation
The US Dollar’s recovery comes as investors grow uncertain about the Federal Reserve’s (Fed) future interest rate policies. Currently, financial markets anticipate that the Fed will begin lowering interest rates from the September meeting, with further cuts expected in November or December.
However, Fed policymakers are advocating for maintaining the current interest rates until there is consistent evidence of declining inflation. During Tuesday’s New York session, Fed Governor Michelle Bowman stated in an interview that she does not foresee any rate cuts this year. She emphasized that rate cuts would be inappropriate at this time, and additional rate hikes remain a possibility if progress in reducing inflation stalls or reverses.
Upcoming Economic Data and Fed Policy Outlook
Looking ahead, investors are focusing on the upcoming release of the United States (US) core Personal Consumption Expenditure (PCE) Price Index for May, scheduled for Friday. The core PCE price index is the Fed’s preferred measure of inflation and will provide important insights into the central bank’s future rate decisions.
Silver’s performance will likely remain influenced by the evolving expectations regarding Fed policies and the US Dollar’s movements. The upcoming economic data and Fed speeches will be crucial in shaping market sentiment and the outlook for precious metals.
