Silver Price Forecast: XAG/USD Rises Toward $69.00 Ahead of US PCE Inflation Data

During Wednesday's European session, silver prices extended the previous trading day's upward momentum, trading near $68.83 per ounce. The US Treasury's decision to double the size of its liquidity support repurchase program for long-dated notes and bonds exerted downward pressure on the US dollar, pushing the dollar index to a three-month low earlier, creating a favorable environment for dollar-denominated silver.

**PCE Data Becomes Key Short-Term Variable**

Market participants are closely monitoring the upcoming US Personal Consumption Expenditures price index to assess the Federal Reserve's rate path next month. According to the CME FedWatch tool, as of this week, market expectations for a 25-basis-point rate cut by the Fed next month have risen to 66% from 56% a week earlier. Economists expect the Fed's preferred core PCE inflation gauge to accelerate to 2.8% year-over-year from the previous 2.7%. If the data unexpectedly comes in higher than expected, it could briefly boost the dollar and pressure silver; conversely, data meeting or falling below expectations could reinforce rate-cut expectations, providing further support for silver prices.

**Geopolitical Developments vs. Dollar Moves**

Despite the weaker dollar providing a boost to silver, marginal changes in safe-haven demand warrant attention. According to reports, a ceasefire agreement between Israel and Iran-backed armed groups took effect earlier Wednesday, temporarily ending nearly 14 months of conflict, which has somewhat diminished silver's safe-haven appeal. However, from a technical perspective, silver prices have held above key psychological levels over the past two trading sessions, indicating that bulls retain some initiative amid the dollar's pullback.

**Focus on Jackson Hole Signals Ahead**

Beyond inflation data, markets remain highly vigilant about the Fed Chair's speech at the Jackson Hole symposium. Market reports suggest the remarks may warn of upside inflation risks, and if the tone leans hawkish, it could trigger rate-hike concerns, thereby limiting upside room for the non-yielding asset silver. Overall, the short-term direction of silver prices will depend on the combined effect of inflation data and central bank policy signals.