Silver charges toward $70, but Warsh could cool rally

Silver (XAG/USD) surged on Thursday, trading around $69.50, marking a 2.74% gain for the day. This increase is driven by anticipation of Federal Reserve Chair Kevin Warsh's speech on Friday, which could provide insight into the Fed's stance on persistent inflation. At the previous monetary policy meeting, Warsh didn't offer specifics on future moves but reiterated the central bank's commitment to drive inflation toward its 2% objective.

Recent economic data continues to signal persistent inflationary pressures with the Personal Consumption Expenditures (PCE) Price Index suggesting inflation remains above the Fed's target. Current markets see a 62% probability that the Fed will maintain interest rates steady in September, according to the CME FedWatch tool. Several Fed officials, including Cleveland Fed President Beth Hammack and Kansas City Fed President Jeff Schmid, are maintaining a cautious approach towards inflation.

Meanwhile, Chicago Fed President Austan Goolsbee highlighted that the biggest short-term concern is that inflation remains uncontrolled. These remarks may bolster the US Dollar and US Treasury yields if investors lower expectations for monetary easing. A stronger US Dollar and higher interest rates can negatively impact Silver, as it carries no yield. However, geopolitical tensions in the Middle East continue to provide support to precious metals.