Silver prices (XAG/USD) continued to decline near $29 during the Asian session on Tuesday, as the white metal faces downward pressure due to concerns over a slowing Chinese economy. Investors are awaiting key US economic data later this week, including the preliminary reading of the US S&P Global Purchasing Managers Index (PMI) for July, the second-quarter Gross Domestic Product (GDP), and the Personal Consumption Expenditures (PCE) Price Index for June.
The recent slowdown in China’s economy has raised concerns about reduced industrial demand for silver. China’s Q2 GDP growth was weaker than anticipated, and retail sales grew at the slowest rate since 2022. Given China’s significant role as a major consumer of industrial metals, the economic deceleration is negatively impacting silver prices.
Conversely, expectations of Federal Reserve (Fed) rate cuts in September could provide some support for silver. Both New York Fed President John Williams and Fed Governor Christopher Waller have indicated that the Fed is nearing its target for rate reductions. The CME FedWatch Tool shows that traders have fully priced in rate cuts for September, with expectations for at least two quarter-point reductions in 2024.
Additionally, the political uncertainty following US President Joe Biden’s withdrawal from the 2024 presidential race might offer temporary support to silver prices.
