Key Points:
- Silver price (XAG/USD) rises towards $39.00, benefiting from increased safe-haven demand.
- Concerns over Fed independence rise as Trump announces the removal of Fed Governor Lisa Cook.
- Fed Governor Cook’s removal heightens expectations of earlier rate cuts amid Trump’s push for lower borrowing costs.
Silver Price Climbs as Safe-Haven Demand Surges
Silver (XAG/USD) shows positive momentum, recovering from recent losses and trading around $38.80 per troy ounce during the Asian hours on Tuesday. The precious metal’s uptick is driven by a surge in safe-haven demand, which has been bolstered by rising concerns over the independence of the U.S. Federal Reserve (Fed). These concerns intensified after President Donald Trump’s announcement that he would remove Fed Governor Lisa Cook over alleged mortgage fraud.
Trump’s public letter on social media, revealing his intention to remove Cook from the Fed’s board of directors, has stirred volatility in the market. Cook’s removal could further pressure the central bank, increasing the likelihood of earlier interest rate cuts as Trump continues his criticism of the Fed and its policies. This uncertainty around Fed independence has led many investors to seek safety in precious metals, with silver emerging as a strong candidate due to its historical appeal in times of economic instability.
Potential Rate Cuts on the Horizon
While Trump’s pressure on the Fed continues to grow, Fed Governor Cook has firmly stated that she will not resign, asserting that there is no legitimate cause for her dismissal. Despite Cook’s defiance, markets are speculating that her removal could potentially lead to quicker interest rate reductions, especially given Trump’s sustained calls for the Fed to lower borrowing costs. Lower rates generally reduce the opportunity cost of holding non-yielding assets like silver, thereby making the precious metal more attractive to investors.
Geopolitical Tensions Fuel Silver’s Safe-Haven Appeal
Further boosting silver’s appeal, President Trump has also escalated tensions with China, threatening a 200% tariff on Chinese goods if Beijing refuses to supply magnets to the United States. Additionally, Trump has warned of further tariffs and export restrictions on advanced technology and semiconductors in response to digital services taxes on U.S. tech companies. These geopolitical developments contribute to an environment of heightened uncertainty, making silver a safe-haven asset for investors looking to shield themselves from potential market volatility.
Powell’s Remarks at Jackson Hole and Upcoming Data to Shape Fed Policy
The market’s focus will shift to U.S. Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday. Powell acknowledged rising risks to the job market, though he also highlighted that inflation remains a persistent concern. Powell’s remarks raised questions about the Fed’s future policy direction, with traders awaiting further clarification on whether the central bank will proceed with rate cuts.
Investors will closely watch the upcoming U.S. Gross Domestic Product (GDP) report for the second quarter (Q2) and the July Personal Consumption Expenditures (PCE) Price Index, which is the Fed’s preferred inflation gauge. These key economic indicators will likely provide valuable insights into the state of the economy and influence the central bank’s decision on whether to ease monetary policy further.
Silver Technical Outlook: Testing $39.00 Resistance
Silver’s recent rally has brought it closer to the critical $39.00 resistance level, a key target for traders. A breakout above this level would signal the continuation of the bullish trend, potentially paving the way for silver to challenge higher levels. The current price action suggests that silver is in a solid upward trend, with continued support from both technical factors and fundamental catalysts.
The immediate support for silver is around the $37.50–$37.00 range, which has held strong during recent pullbacks. As long as silver maintains its position above these levels, the path of least resistance remains upward. A decisive break above the $39.00 level would likely open the door for silver to target the next resistance zone at $40.00–$42.00.
Conclusion: Silver’s Bullish Bias Remains Intact Amid Fed Uncertainty and Geopolitical Risks
Silver continues to benefit from strong demand as a safe-haven asset amidst growing uncertainty surrounding Fed policy and escalating geopolitical tensions. With traders closely monitoring Powell’s speech and key economic data, silver’s bullish bias remains intact. The precious metal is well-positioned to maintain upward momentum, with $39.00 as a key resistance level in the short term. Should this level be breached, silver could see further gains, potentially targeting $40.00 or higher in the coming weeks.
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