Silver Prices: XAG/USD falls to near $28.50 due to diminishing hawkish mood of Fed

LONDON (September 2) Silver price (XAG/USD) extends its losses for the second consecutive session, trading around $28.50 per troy ounce during the early hours on Monday. This downside could be attributed to the improved risk sentiment following Friday’s US Personal Consumption Expenditures (PCE) Index data for July led traders to scale back expectations of an aggressive Federal Reserve rate cut in September.

Federal Reserve Atlanta President Raphael Bostic, a prominent hawk on the FOMC, indicated last week that it might be "time to move" on rate cuts due to further cooling inflation and a higher-than-expected unemployment rate. FXStreet’s FedTracker, which gauges the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Bostic’s words as neutral with a score of 5.6.

According to the CME FedWatch Tool, markets are 70.0% anticipating at least a 25 basis point (bps) rate cut by the Fed at its September meeting. Traders are now likely to focus on the upcoming US employment figures, including the Nonfarm Payrolls (NFP) for August, to gain further insights into the potential size and pace of Fed rate cuts.

Safe-haven Silver could face downward pressure as widespread protests erupted in Israel on Sunday, fueled by growing frustration over the government's inability to secure a ceasefire agreement. Israeli media estimated that up to 500,000 people demonstrated in Jerusalem, Tel Aviv, and other cities, urging Prime Minister Benjamin Netanyahu to take stronger action to bring home the remaining 101 hostages, according to Reuters.

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