Silver Price Forecast: XAG/USD strengthens as US Dollar weakens due to increase in Fed dovish bets

LONDON (March 3) Silver price (XAG/USD) surges an almost 1% to near $31.50 in European trading hours on Monday. The white metal strengthens as an increase in Federal Reserve (Fed) dovish bets has weighed on the US Dollar (USD).

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, resumes its downside after a three-day upside move and slumps to near 107.00.

According to the CME FedWatch tool, there is a 77% chance that the Fed will cut its borrowing rates in June, up from 63% a week ago. In the March and May policy meetings, the Fed is almost certain to keep interest rates steady in the range of 4.25%-4.50%.

Traders have raised bets supporting the Fed to reduce its borrowing rates in June after the United States (US) Personal Spending data declined for the first time in January in two years.

For more cues on the Fed’s monetary policy outlook, investors will focus on a slew of US economic data, notably on the Nonfarm Payrolls (NFP), releasing this week.

Meanwhile, fears of US President Donald Trump’s tariffs on Canada, Mexico, and China have also increased the demand for safe-haven Silver. On March 4, Trump is poised to impose tariffs on these countries for pouring drugs into the US economy.

FXStreet