Silver price forecast: High volatility ahead of US economic data.
Silver price forecast: Silver prices have fallen from a 14-year high to below $45 per ounce, with the market awaiting US PCE inflation data to determine the new trend.
Silver prices fall after a sharp rise.
In Friday morning trading in Asia, silver (XAG/USD) retreated to near $44.80 per ounce after hitting its highest level in over 14 years. New impetus for the market is expected to come from the release of the US August Personal Consumption Expenditures (PCE) price index report later today.
Previously, silver had benefited from expectations that the Fed might cut interest rates at least twice in the remainder of 2025. Lower interest rates reduce the opportunity cost of holding silver, which is a non-yielding asset.
However, cautious statements from Fed officials, particularly Chairman Jerome Powell, have strengthened the US dollar and put downward pressure on silver.
Conflicting views within the Fed
While Powell argued that interest rates are currently at an appropriate level and do not need a rapid reduction, Governor Stephen Miran advocated a more significant cut of 0.5%, citing inflation approaching the 2% target.
Data from LSEG shows that the market is now only betting about 33% on the possibility of the Fed cutting interest rates this year.
Geopolitical factors support silver prices.
In addition to monetary policy, tensions in Europe and the Middle East also contributed to preventing silver prices from falling too sharply. Ukrainian President Volodymyr Zelensky warned that Russia is increasing drone attacks, both day and night, raising demand for safe haven assets. This helped support the precious metal in the short term despite volatility in the US economy.