Silver (XAG/USD) rallied to approximately $30.50 during Wednesday’s American session, buoyed by a decline in the US Dollar (USD). The weakening of the USD followed comments from Federal Reserve (Fed) Chair Jerome Powell at the European Central Bank (ECB) Forum on Central Banking, where he indicated that the US economy is back on a disinflationary trajectory.
Powell noted substantial progress in tackling inflation, though he emphasized that policymakers are cautious and wish to see sustained inflation declines over several months before considering interest rate cuts. Consequently, the US Dollar Index (DXY), which measures the greenback’s value against six major currencies, fell to around 105.50. Concurrently, 10-year US Treasury yields dropped to nearly 4.42%. These lower yields and a weaker USD make non-yielding assets like silver more attractive by reducing their opportunity cost.
Labor Market Uncertainty Adds to Silver’s Appeal
Investor concerns over the labor market added further support for silver. The ADP Employment report revealed an unexpected drop in private payrolls for June, with fresh payrolls totaling 150,000, below the forecast of 160,000 and the previous month’s 152,000. This labor market uncertainty contributes to a cautious outlook for the US economy, enhancing silver’s safe-haven appeal.
Upcoming Economic Indicators
Looking ahead, investors are turning their attention to key economic indicators, including the US ISM Services PMI for June and the minutes from the Federal Open Market Committee (FOMC) meeting held in June. These data points will be crucial in shaping market expectations for future Fed policy actions and could further influence the trajectory of silver prices.
Silver’s recent rally underscores the market’s reaction to shifting economic conditions and Fed policy signals, positioning the white metal as a favorable investment amidst ongoing economic uncertainties.
