Silver price (XAG/USD) climbed in Asian trading hours on Tuesday, approaching the $39.00 per troy ounce level, as investors increased allocations to safe-haven assets. The move comes amid growing uncertainty surrounding the Federal Reserve’s independence, following the U.S. President’s announcement of the removal of Fed Governor Lisa Cook over alleged mortgage fraud.
This development has fueled speculation of accelerated interest rate cuts, further supporting demand for non-yielding assets like precious metals. Michael Miller, a broker at Maverix-Global, outlines the essentials of this topic in the article.
Silver Price Momentum Amid Political Pressure
At the time of writing, XAG/USD is trading near $38.80, recovering from the losses recorded in the previous session. The price of Silver is experiencing upward momentum as traders reassess risk exposure amid heightened political tension between the White House and the Federal Reserve (Fed).
The U.S. President’s decision to remove Fed Governor Cook triggered immediate questions about the central bank’s ability to maintain policy independence. Any perceived weakening of the Fed’s credibility tends to bolster safe-haven flows, with Silver benefiting alongside Gold (XAU/USD) and the U.S. Dollar Index (DXY).
The focus now shifts to whether Cook’s removal could accelerate the timeline for potential monetary policy easing, as the U.S. President has repeatedly pressured the Fed to lower borrowing costs in an effort to stimulate economic growth.
Trade Tensions Add to Safe-Haven Appeal
Beyond the Fed controversy, geopolitical and trade developments further reinforced safe-haven demand. According to Reuters, the U.S. President threatened to impose a 200% tariff on Chinese goods should Beijing refuse to supply critical rare-earth magnets to the U.S.
Additionally, Bloomberg reported that the U.S. President signaled the possibility of additional tariffs and export restrictions on advanced technology, semiconductors, and digital services.
These threats escalate concerns over a renewed U.S.–China trade war, which could destabilize global supply chains. Historically, Silver prices tend to respond positively to geopolitical risk, as investors seek refuge from volatility in equities and emerging market assets.
Jackson Hole Takeaways and Inflation Outlook
The market also continues to digest comments made by Fed Chair Jerome Powell at the Jackson Hole Symposium last Friday. Powell acknowledged that risks to the U.S. labor market were rising but also stressed that inflation pressures remain persistent.
His cautious tone suggested the Fed is not locked into a predefined path, leaving traders speculating about upcoming policy moves.
The upcoming release of Q2 U.S. Gross Domestic Product (GDP) Annualized and the July Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, will be critical for shaping rate expectations. Should PCE inflation data show further moderation, markets may price in more aggressive rate cuts, reinforcing demand for non-yielding assets such as Silver.
Technical Analysis: XAG/USD Targets $39.00
From a technical standpoint, XAG/USD is showing resilience after bouncing back from recent lows. The price is currently consolidating around $38.80, with immediate resistance seen near the $39.00 psychological level. A clear breakout above this barrier could open the door toward the next resistance at $39.40–$39.50, followed by the $40.00 handle.
On the downside, initial support is aligned at $38.40, with further downside protection at the $38.00 round figure. A sustained move below $38.00 could expose the next support at $37.50.
Momentum indicators on the daily chart remain constructive, with the Relative Strength Index (RSI) holding near the 60-mark, suggesting that bullish momentum has room to extend without entering overbought territory.
Market Implications and Investor Positioning
The intersection of political intervention in the Fed, rising trade tensions, and uncertain inflation dynamics creates a favorable backdrop for safe-haven assets. Silver, in particular, has an added advantage over Gold due to its dual role as both a precious metal and an industrial commodity.
If trade tensions with China escalate, the industrial demand outlook for Silver could face headwinds, particularly in the technology and renewable energy sectors. However, the safe-haven bid currently dominates, with investors positioning for potential policy shocks.
The U.S. Dollar Index (DXY), another safe-haven asset, is also gaining traction, but the non-yielding nature of Silver provides an attractive hedge against both inflation uncertainty and real yield volatility.
Conclusion
The XAG/USD rally toward $39.00 underscores the strong safe-haven demand triggered by growing concerns over Fed independence following the attempted removal of Fed Governor Lisa Cook. Coupled with the U.S. President’s tariff threats against China and the lingering risks of inflation, Silver has regained investor favor.
As markets await the U.S. GDP and PCE inflation data, the trajectory of Silver will remain sensitive to any signals of monetary policy easing. For now, the combination of geopolitical risk, political uncertainty, and monetary policy speculation continues to underpin bullish momentum in Silver prices.
