Silver prices climbed for the third consecutive day on Friday, hitting $28.90 per troy ounce during early European trading. This surge is attributed to the growing likelihood of an aggressive interest rate cut by the Federal Reserve in September, driven by dovish comments from Fed officials.
Chicago Fed President Austan Goolsbee’s statement on Friday, suggesting a near-term easing of interest rates, fueled optimism for silver, a non-yielding asset. Goolsbee’s remarks, analyzed as neutral by FXStreet’s FedTracker, hinted at a steady reduction in interest rates over the coming year.
The market is now fully expecting at least a 25 basis point rate cut at the September meeting, with the probability of a larger 50 basis point cut climbing to 41.0%, according to the CME FedWatch Tool.
However, potential gains for silver may be capped by safe-haven flows, as easing tensions in the Middle East reduce demand for safe-haven assets. Israeli forces have withdrawn from Jenin and a nearby refugee camp after ten days of intense conflict, leaving behind significant infrastructure damage, according to Reuters. The Palestinian health ministry reported 21 fatalities during the operation.
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