Expectations of interest rate cuts by the Fed impact the silver price
Thursday’s economic indicators painted a resilient picture of the US economy. A significant decline in unemployment claims and an increase in the S&P PMI indicate that the private sector continues to grow.
This strength in the labor market makes it less likely that the Federal Reserve will take aggressive action on interest rate cuts. According to the CME FedWatch Tool, there is a 97% probability of a modest 25 basis point rate cut in November, with no expectations for a larger 50 basis point cut.
“Given the positive economic data, the Fed is expected to take a more cautious approach,” said a financial strategist. These prospects contribute to the strengthening of the US dollar, putting further pressure on the silver price.
The appeal of silver as a safe haven amid geopolitical uncertainty
Despite these headwinds, silver could find support due to ongoing geopolitical uncertainties and the looming US presidential election. Election dynamics, coupled with tensions in the Middle East, are driving some investors to safe havens like silver.
While economic data favors a stronger dollar, uncertainties surrounding the US elections and geopolitical risks – especially in the Middle East – could increase demand for silver. Traders are keeping a close eye on developments, with the metal’s safe-haven status potentially offsetting some of the selling pressure.
In conclusion, while silver faces near-term challenges from a strong US dollar, silver’s safe-haven appeal remains intact amid economic and geopolitical uncertainties, leaving the metal’s outlook mixed.