Cook Effect Dampens Silver
Silver prices (XAG/USD) weakened to around $38.50 during the Asian session on Wednesday. Pressure stemmed from profit-taking and a strengthening US dollar, causing prices to retreat after the previous strong move. However, renewed concerns about the Fed's independence have the potential to limit the decline, as silver is once again being considered as a safe-haven asset.
The market continues to assess US President Donald Trump's move to fire Fed Chair Lisa Cook. Trump said he will soon have a majority of nominees on the Board of Governors to support an interest rate cut, while Cook asserted that Trump has no authority to fire her and will not resign.
This action is seen as an attempt to influence monetary policy, which could weigh on the dollar and support the prices of USD-denominated commodities like silver. Market bets on a Fed rate cut next month are also supporting silver, especially since Fed Chair Jerome Powell has opened the door to a rate cut—although that could be complicated if inflationary pressures rise again. Lower interest rates reduce the opportunity cost of holding silver.
The next focus is on the release of the US PCE Price Index for July on Friday. If inflation is hotter than expected, the Fed's room to cut interest rates could narrow, strengthening the dollar and pressuring silver. Conversely, more benign data could maintain an upward bias for XAG/USD. (ayu)
Source: Newsmaker.id
