In the late Asian session on Thursday, silver prices (XAG/USD) surged to $24.70, as the white metal recorded gains in anticipation of the release of the United States core Personal Consumption Expenditure Price Index (PCE) data for February scheduled for Friday.
The forthcoming Core PCE data is expected to offer insights into the Federal Reserve’s (Fed) timing for potential interest rate adjustments. Analysts anticipate steady annual underlying inflation growth of 2.8%, with monthly growth projected to decrease slightly to 0.3% from January’s 0.4%.
Market sentiment currently suggests expectations of a Fed interest rate cut starting from the June policy meeting. Additionally, projections from Fed policymakers in the recent monetary policy meeting indicate anticipation of three rate cuts by year-end.
The CME FedWatch tool indicates that traders are pricing in a 64% probability of a Fed interest rate trim in June.
Meanwhile, the US Dollar Index (DXY) experienced a slight decline from monthly highs of 104.50. The index has largely maintained a sideways trajectory within the 104.00-104.50 range over the past four trading sessions. However, anticipation surrounding US core PCE inflation may prompt the USD Index to break out of this consolidation phase.
Furthermore, 10-year US Treasury yields rebounded to 4.21% after a sharp decline to 4.18% on Wednesday, reflecting the dynamic nature of market sentiment ahead of key economic data releases.
As traders await the release of US core PCE data and monitor developments in interest rate expectations, silver prices are likely to remain volatile, responding to shifts in market sentiment and economic indicators.
