Silver Price Forecast: XAG/USD struggles near $38.00 due to diminished odds of Fed cuts

• Silver price edges lower as strong US economic data has reduced the chances of the Fed easing monetary policy.
• US Retail Sales rose 0.6% month-over-month and increased 3.9% year-over-year in June.
• Fed Governor Adriana Kugler stated that it is appropriate to maintain the current policy interest rate for the time being.

Silver price (XAG/USD) holds mild losses after two days of gains, trading around $38.20 per troy ounce during the Asian hours on Friday. The non-interest-bearing Silver attracts some sellers as the upbeat economic data from the United States (US) has dampened the likelihood of the Federal Reserve (Fed) easing monetary policy. It is important to note that higher interest rates make precious metal Silver less attractive for investors seeking higher returns.

US Retail Sales rose by 0.6% month-over-month in June versus -0.9% prior. This figure came in above the market consensus of 0.1%. Meanwhile, the annual Retail Sales climbed 3.9%, compared to a rise of 3.3% in May. Moreover, Initial Jobless Claims for the week ending July 12 fell to 221K from 228K, and came in below the expected 235K.

Furthermore, Federal Reserve Governor Adriana Kugler noted that it is appropriate to keep the policy rate of interest steady "for some time," given low unemployment and building price pressure from tariffs. Kugler highlighted that inflation remains above the 2% target, and the labor market is stable and resilient.

San Francisco Fed President Mary Daly stated that rate cuts twice this year are a "reasonable" outlook, while cautioning against waiting too long. Meanwhile, Fed Governor Christopher Waller said that he believes that the Fed should reduce its interest rate target at the July meeting, citing mounting economic risks. Waller added that delaying cuts runs the risk of needing more aggressive action later.

The safe-haven Silver may regain its ground amid prevailing global trade tensions. US President Donald Trump stated on Wednesday that he plans to send letters to over 150 countries, notifying them of a 10% tariff rate they will face. He also hinted the rate could rise to 15-20%, though he did not confirm any specifics.