Silver prices (XAG/USD) continue their upward trend, reaching around $28.74 during Thursday’s Asian trading hours. The metal benefits from anticipation that the European Central Bank (ECB) will reduce interest rates to 4.0% with a 25 basis points cut in its upcoming policy meeting later today.
Global central bank easing measures are providing support to silver by diminishing the opportunity cost of holding non-yielding assets. The recent US Consumer Price Index (CPI) report revealed a drop in headline inflation to a three-year low, which has heightened expectations for a 25 basis points rate cut by the Federal Reserve in September. Investors are now focusing on the US Producer Price Index (PPI) and Initial Jobless Claims data, due later Thursday, for further market insights.
Additionally, stagnation in the UK economy has strengthened expectations of a possible quarter-point rate cut by the Bank of England (BoE) in November, with some traders even anticipating an additional cut in December.
August’s US CPI fell to 2.5% year-on-year, down from 2.9% previously and below the anticipated 2.6%. The month-on-month CPI increased by 0.2%. Core CPI, excluding food and energy, held steady at 3.2% year-on-year, with a month-on-month rise to 0.3%, up from 0.2%.
The CME FedWatch Tool shows that markets are largely expecting a 25 basis points rate cut by the Federal Reserve in its September meeting. The probability of a more substantial 50 basis points cut has sharply decreased to 15.0%, down from 44.0% a week ago.
