Silver price forecast: XAG/USD stays above $38.00 on Fed rate cut bets, tariff concerns
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Silver price climbs as expectations grow for a US Federal Reserve rate cut in September.
Soft US labor market data has boosted the odds of a Fed rate cut next month.
The safe-haven demand for Silver increases as traders adopt caution amid renewed tariff concerns.
Silver price (XAG/USD) extends its gains for the second successive session, trading around $38.20 per troy ounce during the Asian hours on Friday. The non-interest-bearing Silver attracts buyers amid rising odds of a rate cut by the Federal Reserve (Fed) in September.
Markets are pricing in nearly a 93% possibility of a 25 basis point (bps) cut in September, up from 48% a week ago, according to the CME FedWatch tool. The expectations for Fed rate cut next month, with another possible move in December, are boosted as new applications for unemployment insurance in the United States (US) increased, following the July US Nonfarm Payrolls (NFP) report pointed to a cooling labor market.
US Initial Jobless Claims showed that the number of US citizens submitting new applications for unemployment insurance increased to 226K for the week ending August 2. This figure came in above the market consensus of 221K and was higher than the previous week’s 218K.
Additionally, the price of the safe-haven Silver appreciates as traders adopt caution after US President Donald Trump announced plans to raise tariffs on pharmaceuticals to as much as 250% and, in the latest move, impose a 100% levy on semiconductor imports. Trump’s sweeping retaliatory tariffs took effect on Thursday, with rates ranging from 10% to 41%, fueling concerns about their potential impact on the US economy.
US President Donald Trump has nominated Stephen Miran, chair of the Council of Economic Advisors, to succeed Adriana Kugler on the Federal Reserve Board of Governors. Traders will also keep their eyes on Trump’s plans to replace Fed Chair Powell. Fed Governor Christopher Waller, seen as more dovish, is emerging as a top candidate to serve as the central bank’s chair among Trump’s advisers, per Bloomberg.
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