Silver Price Forecast: XAG/USD rises to near $38.00, US CPI data in focus
- Silver price climbs to around $37.90 in Tuesday’s Asian session, up 0.73% on the day.
- Fed rate cut bets provide some support to the white metal.
- Optimism in financial markets might cap the upside for safe-haven assets like Silver.
The Silver price (XAG/USD) attracts some buyers near $37.90 during the Asian trading hours on Tuesday. The white metal edges higher amid rising expectations that the US Federal Reserve (Fed) will deliver an interest rate cut in its September meeting. Investors will take more cues from the key US inflation data later on Tuesday.
Soft US job data for July reinforced the view that the US central bank is likely to pivot toward accommodation sooner rather than later. Furthermore, the dovish remarks from the Fed officials undermine the US Dollar (USD) and lift the USD-denominated commodity price. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding white metal.
Money market traders are now pricing in around a 90% chance of a rate cut in the September meeting, while 58 basis points (bps) of reduction are priced in by year-end, implying two quarter-point cuts and around a one-in-three chance of a third, according to the CME FedWatch tool.
On the other hand, market sentiment shifted toward optimism in recent sessions, which might have curbed precious metals’ appeal as a defensive asset. US President Donald Trump announced late Monday to delay implementing sweeping tariffs on China, extending another 90 days just hours before the last agreement between the world’s two largest economies was due to expire.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
