Silver Price Surges to $36.30 on Fed Rate Cut Bets and Middle East Tensions

Silver Price Forecast: XAG/USD Breaks Above $36.30 on Rate Cut Hopes and Middle East Crisis

Silver (XAG/USD) regained bullish momentum early Thursday, climbing to nearly $36.30 during the Asian session. The rally breaks a two-day downtrend, supported by renewed safe-haven demand, softer US inflation data, and escalating geopolitical tensions in the Middle East.

Fed Rate Cut Bets Weigh on US Dollar, Lift Silver

May’s US CPI came in below expectations, prompting traders to significantly raise the probability of a Federal Reserve rate cut by September. According to the CME FedWatch Tool, odds of a 25 basis point rate cut jumped from 57% to 68%, with a growing 18% chance of an earlier July cut.

“A weaker US Dollar makes USD-denominated commodities like silver more attractive to investors,” analysts noted.

This soft inflation outlook, coupled with lower yields, pressures the Greenback, providing upside for precious metals like silver.

Middle East Tensions Fuel Safe-Haven Demand

According to Reuters, the US is planning a partial embassy withdrawal in Iraq and allowing military dependents to depart Middle East sites due to rising security concerns. The geopolitical risks appear to be driving investor flows into safe-haven assets, such as silver and gold.

Moreover, White House envoy Steve Witkoff is set to meet with Iranian Foreign Minister Abbas Araghchi in Muscat this weekend, potentially discussing Iran’s response to a new US nuclear proposal. Any sign of de-escalation may cap silver’s gains, while renewed conflict could push prices even higher.

Key Factors Supporting Silver’s Rise:

• XAG/USD trades near $36.30, highest in three days.
• US inflation data below forecast, strengthening rate cut outlook.
• Traders price in a 68% chance of a Fed rate cut by September.
• Middle East geopolitical tensions increase safe-haven buying.
• Upcoming data: US PPI and Initial Jobless Claims may influence next moves.

Explore More on Tredu.com:

• Why Silver is Gaining in 2025
• Safe-Haven Assets: Silver vs. Gold
• Rate Cuts and Commodities: What Traders Should Know