Silver Price Forecast: XAG/USD struggles amid strong US data, Fed’s caution stance

NEW YORK (January 17) Silver price stays depressed for the second straight day, though it appears to have bottomed at around the $22.50 area for the third occasion during the last couple of months, as it loses 1.58% after hitting a daily high of $22.94.

XAG/USD falters, bottoms at around $22.50 as investors adjust Fed rate cut trajectory

Fundamentally speaking, solid economic data from the United States (US) bolstered the Greenback (USD) as US Treasury yields resumed to the upside. Retail Sales for December rose by 0.6%, exceeding forecasts of a 0.4% jump and November’s reading. Lately, the US Federal Reserve announced that Industrial Production improved modestly by 0.1%, after contracting and stagnating in October and November of last year.

Meanwhile, Fed officials continued to push back against aggressive rate cuts, even though most of them see at least three rate cuts, as portrayed by December’s Summary of Economic Projections (SEP). Yesterday’s comments of Fed Governor Christopher Waller, who said that he supports rate cuts but added the US central bank is in no rush to relax policy. That sparked a reaction on bets that the Fed would ease policy faster than expected, as seen with investors trimming odds from 175 basis points of rate cuts at the beginning of the week to 148.

FXStreet