Silver (XAG/USD) continues to shine, hovering around $38.20 per ounce during Friday’s Asian session. The rally is driven by increasing market confidence that the Federal Reserve will slash interest rates in September, coupled with rising geopolitical and tariff-related uncertainties.
📈 Fed Rate Cut Odds Push Silver Higher
Investors are increasingly betting on a 25 basis point interest rate cut next month, with CME FedWatch Tool data showing over 90% probability, compared to just 48% a week earlier. The shift in sentiment follows a wave of soft US labor market indicators, including rising unemployment claims and a cooling nonfarm payrolls report.
- US Initial Jobless Claims climbed to 226,000 for the week ending August 2, exceeding expectations and marking the highest level since early July.
- Weak job market data fuels expectations of a more accommodative monetary policy by the Fed — a scenario historically favorable for non-yielding assets like silver.
⚠️ Renewed Tariff Threats Boost Safe-Haven Appeal
The safe-haven allure of silver strengthens amid heightened global trade tensions. President Donald Trump’s new tariff measures — including plans for 250% duties on pharmaceuticals and 100% tariffs on semiconductors — have raised alarms about the potential economic fallout.
- Tariff hikes ranging from 10% to 41% took effect Thursday, triggering market caution and encouraging capital flow into precious metals.
- Ongoing trade war fears continue to support silver as a hedge against market instability and inflation risks.
🔄 Fed Leadership in Focus
Political developments are also under scrutiny, as Trump nominates Stephen Miran to replace Adriana Kugler on the Fed board. Meanwhile, Christopher Waller, known for his dovish stance, is being floated as a potential replacement for current Fed Chair Jerome Powell — a move that could signal an even softer monetary path ahead.
🧐 Outlook: Silver Eyes More Upside Above $38
With supportive fundamentals and safe-haven demand in play, silver is likely to maintain its bullish momentum in the short term. Investors will closely monitor Fed commentary, economic data, and any further tariff escalations for fresh cues.
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