Silver Price Forecast: XAG/USD depreciates to near $27.50 due to improved risk sentiment

• The downside of the Silver price could be restrained due to rising Middle East tensions.
• The BBC reported on Tuesday that the US has deployed a guided missile submarine to the Middle East.
• The lower-than-expected US PPI data have diminished the odds of a bigger rate cut by the Fed in September.

Silver price (XAG/USD) extends its losses for the second consecutive day, trading around $27.70 per troy ounce during Wednesday’s Asian session. This downside of the safe-haven Silver could be attributed to an improved risk-on mood despite rising geopolitical tensions in the Middle East.

The BBC reported on Tuesday that the United States sent a guided missile submarine to the Middle East. Additionally, Israeli forces pressed on with their operations near the southern Gaza city of Khan Younis on Monday. CBC News cited Palestinian medics saying Israeli military strikes on Khan Younis on Monday killed at least 18 people.

The downbeat Producer Price Index (PPI) data from the United States (US) have decreased the bets for a bigger interest rate cut by the US Federal Reserve (Fed) in September. Furthermore, traders will likely observe the US CPI inflation report on Wednesday, which could offer some hints about the Federal Reserve’s (Fed) interest rate cut path.

The US Producer Price Index (PPI) rose 2.2% YoY in July from 2.7% in June, falling short of the market expectation of 2.3%. Meanwhile, the PPI increased 0.1% MoM after rising by 0.2% in June. The Core PPI rose by 2.4% year-on-year in July, against the previous reading of 3.0%. The index fell short of an estimate of 2.7%. The Core PPI remained unchanged.

On Tuesday, Atlanta Fed President Raphael Bostic stated that recent economic data has increased his confidence that the Fed can achieve its 2% inflation target. However, Bostic indicated that additional evidence is required before he would support a reduction in interest rates, according to Reuters.