Silver Price Forecast: XAG/USD holds above $29.00 despite fading Fed rate cut hopes

• Silver price recovers to $29.05 in Friday’s early European session. 
• The lower bets on the Fed rate cut weigh on the white metal. 
• The US Producer Price Index (PPI) rose 2.2% YoY in May, compared to the 2.3% increase in April, below expectations. 

The Silver price (XAG/USD) trades in positive territory near $29.05 on Friday during the early European session. The white metal finds some support and bounces off monthly lows around $28.65 despite the extended gains in US Dollar (USD). The upside for XAG/USD is likely to be limited amid the growing speculation that the US Federal Reserve (Fed) might cut its key interest rate just once by year-end. 

The markets are now raising their bet that the Fed could begin its easing cycle as soon as September amid signs of cooling inflationary pressures in the United States. The projections that the US Fed will cut rates only once by 25 basis points (bps) this year instead of the two that the consensus previously thought boost the US Dollar (USD) across the board and exert some selling pressure on non-yielding assets like Silver as it makes the white metal more expensive for overseas buyers. 

On Thursday, the US Producer Price Index (PPI) was below the forecast, rising 2.2% YoY in May, compared to the 2.3% increase in April. The core PPI figure rose 2.3% YoY in May, below the consensus and April’s reading of 2.4%, the US Bureau of Labor Statistics revealed on Thursday. Furthermore, the number of Americans filing new claims for unemployment benefits last week rose by 242K, above the market consensus of 225K and the previous week's reading of 229K.

Technically, the immediate resistance level for Silver will emerge at the $30.0 psychological mark en route to $31.55, a high of June 7. The initial support level is seen at the $29.00 round mark, followed by $28.40.