• Silver price gains ground above $29.00 as soft US price pressures weigh on bond yields.
• Traders price in two rate cuts this year against one signaled by the Fed.
• Silver price trades in a Falling Channel formation.

Silver price (XAG/USD) clings to key support of $29.00 in Friday’s American session. The white metal rebounds as US bond yields come under pressure due to improved speculation that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.

10-year US Treasury yields have dropped to near 4.20%. Lower yields on interest-bearish assets reduce the opportunity cost of holding an investment in non-yielding assets, such as Silver.

The CME FedWatch tool shows that the probability for rate cuts in September has improved to almost 71% from 50.4% recorded a week ago. Market expectations for Fed rate cuts have risen as the United States (US) consumer and produce inflation decline on monthly and an annual basis in May. Major contribution to decline in price pressures came from soft gasoline prices.

The CME FedWatch Tool also shows that there will be two rate cuts this year against one signalled by Fed policymakers in their latest dot plot. Fed officials lowered potential number of rate cuts in the forecast report from three forecasted in March as they were concerned over inflation remaining stubborn due to strong labor market conditions