In Tuesday’s European session, the price of silver (XAG/USD) continues its decline, nearing the critical support level of $29.00. The downward trend in the white metal is attributed to the robust performance of the US Dollar (USD) and bond yields, driven by a significant reduction in market expectations of an interest rate cut by the Federal Reserve (Fed) starting from the September meeting.
Investors are increasingly convinced that the Fed will only lower its key borrowing rates once this year, as concerns about persistent price pressures intensify. The US Dollar Index (DXY) has stabilized after reaching a fresh four-week high near 105.40. Meanwhile, 10-year US Treasury yields have slightly receded to 4.44% in the London session but maintain a strong recovery from 4.27%.
Upcoming Triggers for Silver Price
The next significant factors influencing the price of silver will be the release of the May United States Consumer Price Index (CPI) data and the Fed’s interest rate decision. The CPI data will provide insights into whether the disinflationary trend persists or has halted. In the first quarter, the CPI report revealed higher-than-expected price pressures, while April witnessed an anticipated decline.
Meanwhile, it is widely anticipated that the Fed will maintain its current policy stance for the seventh consecutive time, as policymakers lack conclusive evidence that inflation is on track to reach the targeted rate of 2%. Investors will closely monitor the Fed’s dot plot, which indicates policymakers’ projections for the federal funds rate trajectory. The CME FedWatch tool indicates that pricing data for the 30-day Fed Fund Rate suggest only one rate-cut move this year.
