Warsh Speech May Cool Silver Rally
The price of Silver has been rising towards $70, but this momentum could be short-lived due to an upcoming speech from Federal Reserve Chair Kevin Warsh. On Friday, investors will look for indications on how the Fed assesses persistent inflationary pressures and their implications for interest rates.
Warsh's previous speech in July did not provide specific guidance on the Fed's next moves, but reaffirmed their commitment to bringing inflation back towards its 2% target. A similar message this week could reinforce expectations of elevated interest rates, which would be unfavorable for Silver as it offers no yield.
Recent US data continues to point to persistent inflationary pressures, with the Personal Consumption Expenditures (PCE) Price Index showing inflation above the Fed's target. However, price indicators do not show a renewed sharp acceleration. The CME FedWatch tool indicates that markets see around a 62% chance of the Fed leaving interest rates unchanged in September.
Several Fed officials are maintaining a cautious stance on inflation. Cleveland Fed President Beth Hammack said that now is the time to act given persistent inflation and indicated that she does not view current monetary policy as restrictive for the US economy. Kansas City Fed President Jeff Schmid reiterated the need to return inflation to target, citing the energy shock starting to feed through to the economy.