Silver Price Forecast: XAG/USD Slips to $38.20 as Fed Cut Hopes Diminish

Silver Price Forecast: XAG/USD Slips to $38.20 as Fed Cut Hopes Diminish

The price of Silver (XAG/USD) is trading slightly lower near $38.20 per troy ounce in early Friday trading. After two consecutive sessions of gains, the non-interest-bearing metal is facing selling pressure, triggered by strong US economic data and reduced expectations for a Federal Reserve rate cut in the near term.

US Retail Sales and Jobless Claims Surprise to the Upside

• US Retail Sales rose 0.6% month-over-month in June, recovering from a -0.9% drop previously and far exceeding the 0.1% market forecast.
• On a year-over-year basis, retail sales increased 3.9%, compared to 3.3% in May.
• Meanwhile, Initial Jobless Claims dropped to 221K, beating the estimate of 235K and down from the previous week’s 228K.

These figures suggest a resilient US consumer base and a stable labor market, reducing urgency for Fed policy easing.

Fed’s Kugler Pushes Back on Rate Cut Expectations

Federal Reserve Governor Adriana Kugler further dampened hopes of near-term cuts by stating that it is appropriate to maintain the current interest rate "for a while." She highlighted low unemployment and emerging inflationary pressures—including the effects of recent tariffs—as reasons to keep rates steady.

Kugler reiterated that inflation remains above the 2% target, and a stable job market supports a more cautious monetary stance.

Silver Outlook: Pressure Builds as Yield Narrative Strengthens

Precious metals like Silver tend to suffer when interest rates remain elevated, as they do not offer interest income and become less attractive relative to yield-generating assets. With hawkish undertones from the Fed and improving economic indicators, XAG/USD could consolidate or slide further unless inflation or geopolitical risks resurface to revive safe-haven demand.