Silver Price Forecast: XAG/USD faces some selling pressure below $31.50 as US Dollar rebounds

• Silver price trades in negative territory around $31.25 in Friday’s early Asian session, down 0.75% on the day. 
• The rate cut hopes by the Fed and safe-haven flows add sparkle to Silver.
• Firmer US Dollar demand and the Fed’s hawkish stance might cap the white metal’s upside. 

Silver price (XAG/USD) attracts some sellers near $31.25, snapping the three-day winning streak during the early European trading hours on Friday. The white metal trims gains amid the modest rebound of the Greenback. However, the downside might be limited as traders raise their bets on the Federal Reserve (Fed) rate cut in September. 

The US Bureau of Labor Statistics (BLS) revealed on Thursday that the US Consumer Price Index (CPI) increased 3.0% YoY in June, compared to a rise of 3.3% in May, This figure was below the market consensus of 3.1%. On a monthly basis, the CPI declined 0.1% MoM in June, the lowest level in more than three years. 

Financial markets saw a nearly 85% chance of a Fed rate cut in September, up from the 73% seen before the CPI report, according to CME Group’s FedWatch Tool. The growing hopes for rate cuts from US central bank is due to recently softer US inflation data and weaker Services Purchasing Managers Index (PMI). 

Additionally, geopolitical risks and political uncertainty in the US and Europe might boost the safe-haven flows, which benefit the Silver. Also, the concerns about global economic slowdown also lift the white metal as traders find safe destinations to place their funds. 

On the other hand, the renewed Greenback demand and the hawkish message from Fed officials might drag the Silver price lower. Fed Chair Jerome Powell emphasized on Wednesday before the US House Financial Services Committee that it would not be appropriate to cut the policy rate until they gain greater confidence in inflation heading sustainably towards the Fed’s 2% target.