Silver (XAG/USD) is consolidating near a fresh 14-year peak of $45.29, trading around $45.20 in early European hours on Friday. The metal is holding steady after nearly 3% gains in the previous session, with traders awaiting the release of the US August Personal Consumption Expenditures (PCE) Price Index for further direction.
Fed outlook weighs on silver
Stronger US economic data is clouding the outlook for deeper Federal Reserve (Fed) rate cuts. The non-yielding nature of silver makes it vulnerable when interest rates remain elevated, as higher yields raise the opportunity cost of holding the metal. A stronger US Dollar (USD), which advanced more than 0.5%, also limited upside momentum in the dollar-denominated commodity.
US economic data strengthens case for cautious Fed
US Initial Jobless Claims dropped to 218K last week, the lowest since July and below market expectations of 235K. Meanwhile, US Gross Domestic Product (GDP) expanded at an annualized pace of 3.8% in Q2, surpassing both the 3.3% estimate and the prior reading. The GDP Price Index climbed 2.1%, also slightly above expectations of 2.0%.
Mixed Fed signals ahead of PCE release
Comments from Fed officials highlighted the policy divide. Chicago Fed President Austan Goolsbee said he was reluctant to push for significant easing while inflation remains above target. In contrast, new Fed Governor Stephen Miran favored a larger 0.50% cut to protect the labor market. Kansas City Fed President Jeffrey Schmid also backed a rate cut to support employment conditions.
