During Thursday’s European session, the price of silver (XAG/USD) surged towards the critical resistance level of $28.00, signaling a potential uptrend as investors anticipate the Federal Reserve (Fed) gearing up to commence interest rate reductions starting from the September gathering.
Market sentiment, as reflected in the CME FedWatch tool, underscores a high probability of the Fed lowering its benchmark rates next month. However, there remains divergence among traders regarding the magnitude of the impending rate cuts.
The prevailing speculation surrounding Fed rate decreases has been reinforced by a modest uptick in the United States (US) Consumer Price Index (CPI) figures for July, affirming progress in the disinflation trajectory towards the central bank’s 2% target. Both the annual headline CPI and core CPI, which excludes volatile food and energy prices, moderated to 2.9% and 3.2%, respectively.
The anticipation of Fed rate adjustments has exerted downward pressure on the US Dollar (USD) and bond yields. The US Dollar Index (DXY), a measure of the Greenback’s strength against a basket of major currencies, has exhibited subdued performance just above a more than seven-month low of 102.16. Concurrently, 10-year US Treasury yields have risen to approximately 8.45%, although they remain in proximity to weekly lows.
In the financial sphere, all eyes are on the upcoming release of the US monthly Retail Sales data for July, scheduled for publication at 12:30 GMT. Projections suggest a 0.3% increase in Retail Sales following a stagnant performance in June, a key economic indicator that will likely shape market sentiments moving forward.
