The price of silver (XAG/USD) has continued its upward trend for the third consecutive trading session, maintaining a position around $31.00 per troy ounce as of Thursday’s Asian market hours. Investors are exercising caution ahead of the release of the US Consumer Price Index (CPI) data for June, scheduled for later today, seeking clarity on the Federal Reserve’s future monetary policy stance. Higher interest rates tend to dampen demand for non-yielding assets like silver.
Market analysts expect the annualized US core CPI for June to remain stable at 3.4%. Meanwhile, the headline CPI inflation is projected to show a slight increase of 0.1% month-over-month in June, contrasting with the previous month’s flat reading of 0.0%.
Federal Reserve Chairman Jerome Powell, addressing concerns on Wednesday, emphasized the importance of closely monitoring the labor market, noting significant challenges. Powell expressed confidence in the decreasing trend of inflation, reinforcing remarks made earlier in the week regarding the need for additional data to bolster confidence in inflation projections.
Powell further iterated that a reduction in the policy rate would be premature until the Fed gains more assurance that inflation is on a sustainable path towards the targeted 2%. He highlighted that first-quarter data did not sufficiently support such confidence in the inflation trajectory.
In parallel developments, tensions escalated in the Middle East as Israeli forces conducted offensive operations in northern and central Gaza on Tuesday, including an airstrike on a tent encampment, according to reports from Reuters. Palestinian officials reported at least 29 casualties, predominantly women and children, in the strike that occurred during a gathering at a school grounds in Abassan, east of Khan Younis, where vendors were present.
These events have heightened concerns over potential escalation in the Middle East conflict, prompting investors to seek refuge in safe-haven assets such as silver. The militant group Hamas cautioned that renewed Israeli actions could disrupt ongoing ceasefire negotiations related to the Gaza conflict, with discussions set to resume in Doha on Wednesday.
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