Silver Price Forecast: XAG/USD struggles near $38.00 ahead of Fed policy

LONDON (July 30) Silver price (XAG/USD) loses ground after registering losses in the previous two sessions, trading around $38.10 per troy ounce during the European hours on Wednesday. The price of safe-haven Silver struggles despite market caution ahead of the US Federal Reserve (Fed) interest rate decision later in the North American session.

The price of the non-yielding Silver struggles potentially due to traders’ expectations that the US Fed to keep its benchmark interest rate within 4.25%-4.50% in July. Traders are now pricing in 97% odds of no change to interest rates at the July meeting, according to the CME FedWatch tool. Higher interest rates could weigh on Silver demand, as investors seek higher-yielding alternatives. The Federal Open Market Committee (FOMC) press conference will be observed for any signs that rate cuts may start in September.

Market participants are also awaiting key economic data this week, including the Q2 Personal Consumption Expenditures (PCE) inflation report and July’s Nonfarm Payrolls, for further insight into the health of the US economy.

However, the safe-haven Silver may regain its ground amid rising geopolitical tensions, driven by US President Donald Trump’s threat to tighter deadline for Russia to end the war in Ukraine. Trump said on Tuesday that he would impose secondary tariffs of 100% on Russia if it did not make progress on ending the war within 10 to 12 days, moving up from an earlier 50-day deadline.

Meanwhile, trade optimism diminished after US-China talks in Stockholm ended Tuesday without an agreement to extend the current tariff truce. US Treasury Secretary Scott Bessent said that the two countries will continue talks over maintaining a tariff truce before the deadline in two weeks, and Trump will make the final decision on any extension.

FXStreet