Silver (XAG/USD) is experiencing a slight bearish trend, trading around $28.25 during the early Asian session on Thursday. The recent rebound in the U.S. Dollar (USD) is weighing on silver prices. However, growing speculation about a potential deeper interest rate cut by the U.S. Federal Reserve (Fed) later this month may help limit the white metal’s losses.
Fed Rate Cut Speculation Supports Silver
The release of a weaker-than-expected U.S. JOLTS report on Wednesday has increased the likelihood of a 50 basis points (bps) rate cut by the Fed. According to the CME FedWatch Tool, which gauges market expectations for Fed rate moves, there is a 57% chance of a 25 bps cut and a 43% chance of a 50 bps cut at the Fed’s September meeting. If realized, these anticipated rate cuts could provide some support for silver prices by making the metal cheaper for buyers holding other currencies.
Upcoming U.S. Jobs Data and Silver Outlook
Attention will turn to the U.S. August Nonfarm Payrolls (NFP) report, scheduled for release on Friday. The report is expected to show an addition of 161,000 jobs to the U.S. economy. A weaker-than-expected NFP outcome could put additional pressure on the USD, potentially lifting silver prices due to its USD-denominated nature.
China’s Economic Concerns Impact Silver Demand
On the other hand, concerns about China’s economic growth and demand for silver are contributing to bearish sentiment. As the world’s leading silver exporter, China’s economic outlook is crucial for silver prices. Bank of America Global Research has revised China’s GDP growth forecast for 2024 down to 4.8% from the previous 5.0%. Additionally, a decline in the Chinese Caixin Services PMI, which fell to 51.6 in August from 52.1 in July, adds to the negative outlook for silver.
As silver traders navigate these mixed signals, the interplay between U.S. economic data and global demand trends will be key in determining the metal’s near-term direction.
