- Silver price extends its downside near $26.95 on Tuesday.
- The easing fear of wider tensions in the Middle East improves market sentiment.
- Reduced Fed rate cut speculation boosts the USD and drags the white metal lower.
Silver price (XAG/USD) trades on a softer note for the second consecutive day around $26.95 on Tuesday during the early European session. The easing fear of wider Middle East tensions improves market sentiment and creates a headwind for the precious metal. Traders prefer to wait on the sidelines ahead of the US preliminary S&P Global Purchasing Managers Index (PMI) data for April, due later on Tuesday.
The silver price drifts sharply lower to nearly three-week lows as concerns about a potential broader conflict in the Middle East fade, leading traders to reduce their precious metal positions and favour riskier assets. Iranian Foreign Minister Hossein Amirabdollahian stated on Friday that Iran does not plan to respond to Israel’s retaliatory strike, while Israeli authorities remained mostly silent. The absence of public statements afterward tends to imply that both sides are attempting to ease tensions.
Additionally, the lower expectation for interest rate cuts from the US Federal Reserve (Fed) amid the robust. US economic data and hawkish stances from policymakers provide some support to the US Dollar (USD) and weigh on the US Dollar-denominated silver. New York Fed President John Williams noted that he doesn't feel urgency to cut interest rates, given the strength of the economy. Meanwhile, Chicago Fed President Austan Goolsbee stated that the Fed's current restrictive monetary policy is appropriate due to the robust US economic data.
It’s worth noting that the higher-for-longer US rate narrative might dampen demand for white metal, a non-interest-bearing asset. The chance of a June cut has fallen to 15%, and the odds of a July cut have dropped below 45%. A September cut is not fully priced in, with the probability falling below 70%, according to the CME FedWatch Tool.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.