Silver price (XAG/USD) remains tepid, trading around $27.20 per troy ounce during the Asian session on Tuesday. Growth concerns in the United States (US) have led to a broad selloff in financial markets, dampening the safe-haven appeal of the metal. Recent disappointing US labor market data has heightened fears that the Federal Reserve may be lagging in preventing an economic downturn.

However, the downside of non-yielding metals like Silver could be restrained due to the expectation of a 50-basis point (bps) interest rate cut by the US Federal Reserve (Fed) in September. The CME FedWatch tool shows a 74.5% probability of this rate cut at the September meeting, up sharply from the 11.4% chance reported just a week ago. Lower yields on investments could drive investors to choose assets with better returns.

According to Reuters, Federal Reserve Bank of San Francisco President Mary Daly expressed increased confidence on Monday that US inflation is moving towards the Fed's 2% target. Daly noted that "risks to the Fed's mandates are becoming more balanced and that there is openness to the possibility of cutting rates in upcoming meetings."

Additionally, the geopolitical tensions in the Middle East could have provided support for the safe-haven demand of Silver. Israeli airstrike hit two schools and resulting in at least 30 casualties on Sunday, according to Palestinian officials. This escalation follows a round of talks in Cairo that ended without progress, as reported by Reuters.

Israel and the United States are preparing for a potential escalation in the region following Iran and its allies, Hamas and Hezbollah, pledging retaliation against Israel for the killing of a Hamas leader.

Source : Fxstreet