Silver Price Forecast: XAG/USD depreciates to $30.50 due to improved US yields

FXStreetJun 11, 2024 9:15 AM

The non-yielding Silver loses ground as US Treasury yields edge higher.
Silver prices could strengthen as the Fed is expected to deliver at least a 25 basis-point rate cut in 2024.
The safe-haven demand for Silver diminishes by easing tensions in the Middle East.

Silver price retraces its recent gains, trading around $30.50 per troy ounce during the Asian session on Tuesday. The upward correction in the US Treasury yields dampened the demand for non-yielding assets like Silver.

However, Silver price could limit its losses due to growing expectations of interest rate cuts by the Federal Reserve (Fed) in 2024. This sentiment is reinforced by the unexpected drop in the ISM Manufacturing PMI to 48.7 in May, down from April's reading of 49.2 and below the forecast of 49.6. The US manufacturing sector experiencing its second consecutive month of contraction, marking the 18th in the last 19 months.

Traders increasingly bet on the possibility of rate cuts by the US Federal Reserve (Fed) this year. According to the CME FedWatch Tool, there is nearly a 60% probability of the Fed lowering the policy rate by at least 25 basis points in September.

The safe-haven appeal of Silver has been affected by the easing tensions in the Israel-Hamas conflict in the Middle East. As reported by Reuters on Monday, the US is seeking support from the United Nations Security Council for President Joe Biden's proposal to halt the fighting between Israel and Palestinian militants Hamas in the Gaza Strip. Israeli Prime Minister Benjamin Netanyahu's administration reluctantly accepted President Biden's cease-fire proposal for Gaza on Sunday.

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