Silver (XAG/USD) continues to hold its ground near the critical resistance level of $32.00 during Wednesday’s New York session. The white metal is benefiting from a weakening U.S. Dollar, as speculation mounts that the Federal Reserve will implement another significant interest rate cut in its remaining policy meetings this year.
The U.S. Dollar Index (DXY), which measures the dollar’s performance against six major currencies, is hovering around a yearly low of 100.20. Simultaneously, 10-year U.S. Treasury yields have risen to approximately 3.77%. Typically, higher yields on interest-bearing assets raise the opportunity cost of holding non-yielding investments like silver; however, silver prices remain resilient.
According to the CME FedWatch tool, the Fed is anticipated to lower its key borrowing rates by a total of 75 basis points by year-end, including one 50 basis point and one 25 basis point cut. Additionally, data from 30-day Federal funds futures indicates that the likelihood of a larger-than-usual rate cut in November has surged to 59%, up from 37% a week prior.
Looking ahead, investors are keenly awaiting the U.S. core Personal Consumption Expenditure (PCE) price index for August, the Fed’s preferred inflation measure, set to be released on Friday. Economists project that the annual inflation rate will rise to 2.7%, up from 2.6% in July.
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