Silver Price Forecast: Volatile Ahead of US Economic Data
Silver Price Forecast: Silver prices fall from 14-year high to below $45/ounce, market awaits US PCE inflation data to determine new trend.
Silver prices fall after strong rally
Silver (XAG/USD) retreated to near $44.80 an ounce in Asian trading on Friday morning after hitting a more than 14-year high. Fresh impetus for the market is expected to come from the US Personal Consumption Expenditures (PCE) Price Index report for August due later in the day.
Silver had previously benefited from expectations that the Fed could cut interest rates at least twice in the rest of 2025. Lower interest rates reduce the opportunity cost of holding non-yielding silver.
However, cautious statements from Fed officials, especially Chairman Jerome Powell, have strengthened the USD and put downward pressure on silver prices.
Conflicting views within the Fed
While Powell said interest rates are currently at an appropriate level and do not need to be cut quickly, Governor Stephen Miran supported a more drastic cut of 0.5%, citing inflation as approaching the 2% target.
Data from LSEG shows the market is now betting on just a 33% chance of the Fed cutting interest rates this year.
Geopolitical factors support silver prices
In addition to the impact of monetary policy, tensions in Europe and the Middle East also contributed to keeping silver prices from falling too far. Ukrainian President Volodymyr Zelensky warned that Russia was increasing drone attacks, both day and night, increasing demand for safe havens. This helped the precious metal remain supported in the short term despite the volatility in the US economy.
