Silver Price Forecast: XAG/USD attracts some sellers below $31.00 amid stronger US Dollar

Silver price (XAG/USD) attracts some sellers near $30.60 on Friday during the early European trading hours. The white metal edges lower amid the stronger US Dollar (USD). However, the downside might be limited as the weaker US economic data have triggered the expectation of the Federal Reserve's (Fed) rate-cutting cycle later this year. Later on Friday, the first reading of the US S&P Global Purchasing Managers Index (PMI) reports for June will be published.

Data released by the US Department of Labour showed that US citizens who applied for unemployment insurance benefits rose by 238,000 for the week ending June 15. This figure was below the market consensus of 235,000 and lower than 243,000 in the previous week. This figure indicated a moderation in the labour market and raised the speculation for a Fed rate cut, following the weaker Retail Sales data last week. 

Traders have priced in nearly 64% odds of a Fed rate cut in September, according to CME FedWatch Tool. A lower interest rate generally lifts the Silver price as it reduces the opportunity cost of holding non-yielding assets. “The market is starting to increasingly expect the U.S. central bank to start its easing program. I suspect we might be getting some long positions getting installed into the market,” said Bart Melek, head of commodity strategies at TD Securities.

The advanced reading of the US S&P Global Purchasing Managers Index (PMI) reports for June might offer some hints about economic activity in the United States. Any signs of improvement could lift the Greenback and create a headwind for the USD-denominated Silver.