Silver (XAG/USD) prices rose on Friday, with FXStreet data showing the metal trading at $64.76 per troy ounce, up 0.48% from $64.45 on Thursday [1]. Another report notes a 0.37% gain, with silver trading around $64.70, partially recovering from a recent correction [2]. Despite this rebound, silver prices have declined by 8.90% since the beginning of the year [1].
The rise in silver prices is attributed to fading expectations of further monetary tightening by the US Federal Reserve. Recent US inflation data showed the Producer Price Index (PPI) slowing to 4.7% year-over-year and the Core PPI at 4.2%. These figures, along with Consumer Price Index (CPI) data released earlier in the week, have reduced the perceived likelihood of a Fed rate hike in September to around 35%, down from 40% immediately after the PPI release and from a significantly higher level at the end of July [2]. Lower interest rate expectations support silver, as the opportunity cost of holding non-yielding assets decreases [2].
Fed officials remain divided on the path forward. Chicago Fed President Austan Goolsbee attributes recent price pressures to temporary factors and advocates for patience, while Cleveland Fed President Beth Hammack argues that further rate hikes may be necessary due to insufficient progress on inflation [2].
Geopolitical factors also play a role, with ongoing disruptions in the Strait of Hormuz and Bab el-Mandeb Strait keeping oil prices elevated and potentially reigniting inflationary pressures [2]. The Gold/Silver ratio fell to 67.22 from 67.50, indicating a slight strengthening of silver relative to gold [1]. Technical analysis shows XAG/USD trading at $64.67, below the 100-hour simple moving average at $65.00 but above the 200-hour SMA at $63.09, suggesting near-term consolidation with mildly positive momentum as indicated by an RSI of 52 [2].
Market participants are now awaiting US July Retail Sales data, which could further influence Fed policy expectations and silver prices. A weaker-than-expected reading may reinforce the case for a more cautious Fed, supporting silver, while strong consumer spending could revive speculation of prolonged higher rates [2].
CONCLUSION
Silver prices have rebounded above $64 per ounce, supported by easing Fed rate hike expectations and ongoing geopolitical tensions. While technical indicators suggest near-term consolidation, upcoming US retail sales data could further sway market sentiment and silver's trajectory.