Silver Price Analysis: XAG/USD juggles around $23.30, remains upbeat on renewed Fed rate cut bets

NEW YORK (January 15) Silver price (XAG/USD) trades back-and-forth around $23.30 in a thin-volume trading session due to holiday in the US markets on account of Martin Luther King Birthday.

The broader appeal for non-yielding assets is still upbeat as investors seem more convinced about a reduction in interest rates by the Federal Reserve (Fed) from March after the release of the softer-than-projected United States Producer Price Index (PPI) for December. A surprisingly soft US PPI report has eased fears for inflation remaining stubborn ahead.

S&P500 futures have witnessed some losses in the European session, portraying a decline in risk-appetite of the market participants. The US Dollar Index (DXY) has rebounded to near $102.50 as investors expect that optimism about the Fed cutting interest rates earlier than other central banks is reaching maturity. The market participants see the European Central Bank (ECB) and the Bank of England (BoE) also reducing borrowing costs sooner due to vulnerable economic outlook.

This week, market participants will keenly focus on the US monthly Retail Sales data for December. Investors anticipate that the consumer spending grew at a higher pace of 0.4% against 0.3% increase in November.

Meanwhile, the appeal for safe-haven assets has also improved due to deepening Middle East crisis. Iran-backed Houthis rebels have warned about a retaliation for airstrikes by the US and the UK military.

FXStreet