XAG/USD jumps to 14-year high above $48.50 amid Fed cut bets and US turmoil
Silver price (XAG/USD) rises to around $48.65 during the early European trading hours on Wednesday. The white metal edges higher to near the 14-year high amid mounting expectations of Federal Reserve (Fed) rate cuts and the ongoing US government shutdown.
The US government shutdown entered its eighth day on Wednesday. Rising uncertainty levels could boost the safe-haven flows, supporting the Silver price. US President Donald Trump said on Tuesday that his administration plans to lay off federal workers if the shutdown persists beyond Monday, adding that he would provide details of job cuts within the next four or five days.
The shutdown has postponed the release of US Nonfarm Payrolls (NFP) data, forcing investors to rely on secondary data to gauge the timing and extent of Fed rate cuts. Investors are now pricing in a 25 basis points (bps) cut at the Fed’s October meeting, with an additional 25 bps reduction anticipated in December. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding precious metal.
Investors will take more cues from the FOMC Minutes later on Wednesday for more cues about the US interest rate outlook. Additionally, the Federal Reserve officials are scheduled to speak. Any hawkish comments from Fed policymakers could underpin the US Dollar (USD) and weigh on the USD-denominated commodity price in the near term.
Source : Fxstreet.com
