Silver Price Forecast: XAG/USD rebounds toward $38.50 ahead of US inflation data

• Silver price advances as traders adopt caution ahead of US Consumer Price Index data.
• Fed Chair Powell indicated that inflation may increase over the summer due to tariff-related pressures.
• The safe-haven demand for Silver increases as Trump has warned to impose "very severe" tariffs on Russia.

Silver price (XAG/USD) recovers its recent losses from the previous session, rebounds toward a 14-year high of $39.13, which was reached on Monday, and is trading around $38.40 per troy ounce during the European hours on Tuesday. Silver price gains ground as traders adopt caution ahead of June's US Consumer Price Index (CPI) data, which may offer fresh impetus over the Federal Reserve's (Fed) monetary outlook.

The Silver attracted sellers as Federal Reserve (Fed) Chair Jerome Powell indicated that inflation is expected to rise over the summer, driven by tariff-related pressures. This has increased the likelihood of the Fed delaying interest rate cuts until later this year. Meanwhile, concerns over the Fed's independence resurfaced as President Trump renewed his criticism of Powell, insisting that interest rates should be at 1% or lower.

Moreover, the global trade concerns eased as Trump expressed willingness to engage in further tariff negotiations with the European Union (EU) and other key partners. However, traders would likely adopt caution following the US government's decision, on Monday, to immediately impose a 17% duty on most imports of fresh tomatoes from Mexico after negotiations ended without an agreement to avert the tariff.

However, the safe-haven demand for Silver increases due to renewed geopolitical tensions following the US President Donald Trump's latest threat to impose "very severe" tariffs on Russia if no peace deal is reached within 50 days.

President Trump, alongside NATO Secretary-General Mark Rutte, also confirmed that European allies will purchase billions of dollars' worth of American-made weapons. These weapons include Patriot missile systems, which will be transferred to Ukraine in the coming weeks to tackle intensified Russian attacks.