XAG/USD fails to sustain above $19.00, decline towards $18.80 on risk appetite
- Silver prices stumbled on risk aversion as traders turned to cash.
- Fed’s Bullard: Traders understood the Fed’s commitment to fighting inflation.
- NATO said the attack on the Nord Stream 1 and 2 pipelines was caused by sabotage.
Silver prices slipped for the second time this week amid falling US Treasury yields, as the “aggressive” tone of Fed officials, the energy crisis in Europe and the UK report presented by Kwasi Kuarteng, the UK Treasury Secretary under Liz Truss’ government Mini-budget changed the mood sour. As such, XAG/USD is trading at $18.81 a troy ounce, 0.40% below its open price.
On Thursday, Fed officials led by regional Fed Presidents including Cleveland’s Mester and St. Louis Bullard reiterated that the Federal Reserve is compromised to fight inflation, even if it could trigger a recession. James Bullard said traders understood the Fed was serious about fulfilling its price stability mandate, adding the need for higher interest rates for “an extended period of time”.
Meanwhile, Loreta Mester commented that inflation was the main concern, adding that there was no “reason for a slowdown” and forecasting a peak of around 4.6%.
At the time of my writing, San Francisco Fed Mary Daly said it was not necessary to force the US economy into recession to curb inflation, adding that “additional interest rates are necessary and appropriate.”
Meanwhile, NATO said the Nord Stream pipelines leaks were caused by sabotage, noting that “NATO is committed to repelling and defending against hybrid attacks” and “any deliberate attack on critical infrastructure.” of the Allies would be answered with combined forces and determined reaction.”
Although news of the Nord Stream 1 and 2 pipelines sent energy prices higher, WTI and Brent crude suffered losses of 0.46% and 0.54%, respectively.
Apart from that, new British Prime Minister Liz Truss doubled her tax cut budget and said she was ready to make “controversial” decisions, although recent reports from the Guardian said she would hold an emergency meeting with the Office for Budget Responsibility (OBR) on Friday.
Given the fundamental backdrop, XAG/USD prices fell as traders seeking safety preferred to liquidate their positions and braced for cash. US Treasuries, reflecting the aforementioned, remained dovish during the session, while the US Dollar Index was down 0.69%, falling to 111.040.