Silver prices (XAG/USD) are fluctuating around the $23.30 mark in a low-volume trading session, given the holiday in US markets for Martin Luther King’s Birthday.
Despite the subdued trading atmosphere, the demand for non-yielding assets remains robust. Investors appear increasingly convinced of a potential interest rate cut by the Federal Reserve (Fed) starting in March, particularly after the release of a softer-than-expected United States Producer Price Index (PPI) for December. The unexpectedly mild PPI report has alleviated concerns about lingering inflationary pressures.
In European trading, S&P500 futures registered some losses, reflecting a decline in market participants’ risk appetite. The US Dollar Index (DXY) rebounded to approximately $102.50 as investors anticipate that the optimism surrounding the Fed’s potential interest rate cut is maturing. There is a growing perception that central banks like the European Central Bank (ECB) and the Bank of England (BoE) may also consider reducing borrowing costs sooner due to a vulnerable economic outlook.
The upcoming focus for the week will be on the US monthly Retail Sales data for December. Investors are anticipating a faster pace of consumer spending growth at 0.4%, compared to a 0.3% increase in November.
Simultaneously, the appeal for safe-haven assets has strengthened amidst the deepening Middle East crisis. Iran-backed Houthi rebels have issued warnings of retaliation for airstrikes conducted by the US and the UK military. The evolving geopolitical situation is contributing to the ongoing demand for assets perceived as havens, including silver.
