Silver Price Forecast: XAG/USD edges lower below $48.50 on renewed US Dollar demand

• Silver price drifts lower to $48.40 in Tuesday's Asian session.
• A renewed US Dollar demand weighs on the Silver price. 
• Expectation of US interest rate cuts and the prospect of a prolonged US federal government shutdown boost the Silver price. 

Silver price (XAG/USD) trades in negative territory near $48.45 during the Asian trading hours on Tuesday. The white metal retreats from the 14-year high as the rebound in the US Dollar (USD) weighs on the USD-denominated commodity price. 

The USD recovers to fresh multi-day peaks on rising US yields, which undermine the Silver price as it makes Silver more expensive for investors and buyers using other currencies. Nonetheless, global uncertainty and expectations of future interest rate cuts by the US Federal Reserve (Fed) might cap its upside. 

Uncertainty surrounding a US government shutdown and persistent geopolitical risks boosted demand for safe-haven assets like Silver. The US government shutdown entered its seventh day as US Senators failed to pass spending proposals to reopen the federal government. 

On Sunday, US President Donald Trump said that his administration would begin laying off federal workers. The US September employment report was due for release on Friday, but was not published due to the government shutdown.

Additionally, growing expectations of additional Fed rate cuts also lend some support to the white metal. Lower interest rates could reduce the opportunity cost of holding Silver, supporting the non-yielding precious metal. Traders are currently priced in an additional 25 basis points (bps) cuts in both October and December, with a chance of 95% and 83%, respectively, according to the CME FedWatch tool.