During European trading hours on Tuesday, the price of Silver (XAG/USD) paused its recent three-day upward trend, hovering near $29.30 per troy ounce. The grey metal encountered challenges from a stronger US Dollar (USD), buoyed by higher US Treasury (UST) yields. Market focus remained on Federal Reserve Chairman Jerome Powell’s upcoming speech, pivotal for shaping future monetary policy expectations.
Silver prices could potentially rebound on the back of recent US inflation data, which suggested a moderation, prompting expectations of potential interest rate cuts by the Federal Reserve in 2024. Lower interest rates typically increase demand for non-yielding assets like Silver.
Last Friday, the US Bureau of Economic Analysis reported a decline in annual inflation rates to their lowest levels in over three years. The US Personal Consumption Expenditures (PCE) Price Index rose by 2.6% year-over-year in May, slightly down from April’s 2.7%. Core PCE inflation, excluding volatile food and energy prices, also eased to 2.6% from 2.8% in April.
Despite this, Federal Reserve Bank of San Francisco President Mary Daly cautioned that persistent inflation pressures might necessitate a longer period of higher interest rates.
Uncertainties in Chinese demand further weighed on Silver prices following reports of a second consecutive month of manufacturing contraction in June, as indicated by China’s National Bureau of Statistics (NBS) maintaining the Manufacturing PMI at 49.5.
Market sentiment remains cautious as investors await further economic indicators and Fed policy signals to gauge Silver’s next move amidst global economic uncertainties.
