Silver (XAG/USD) maintained its position above $29 per troy ounce during Wednesday’s European session. The metal’s ability to sustain gains is being tested as investors await significant US economic data, which may influence Federal Reserve monetary policy decisions.
Key reports to watch include the US Purchasing Managers Index (PMI) data, expected later in the North American session, and the Gross Domestic Product (GDP) Annualized figures for Q2, set for release on Thursday. Additionally, the Personal Consumption Expenditures (PCE) price index report on Friday will offer further insights into US economic conditions.
Silver is also facing pressure from sluggish economic activity in China. The unexpected rate cut by the People’s Bank of China (PBoC) on Monday has heightened concerns about the Chinese economy. Given silver’s critical role in various industrial applications such as electronics, solar panels, and automotive components, China’s economic slowdown poses a notable challenge. As one of the world’s largest manufacturing hubs, China’s demand for silver is substantial.
In contrast, India’s reduction of import duties on gold and silver from 15% to 6% is expected to boost demand in the world’s second-largest bullion consumer, supporting its jewelry manufacturing sector.
Silver’s status as a safe-haven asset could be affected by rising optimism regarding ceasefire negotiations between Israel and Hamas. Israeli Prime Minister Benjamin Netanyahu has suggested that a ceasefire agreement, potentially leading to the release of hostages in Gaza, might be imminent. Netanyahu is currently in Washington addressing Congress, as reported by The Associated Press.
Efforts by Egypt, Qatar, and the United States aim to broker a phased deal between Israel and Hamas to end hostilities and secure the release of remaining hostages. Additionally, Palestinian factions Hamas and Fatah have signed a declaration to form a unity government, seeking to resolve their longstanding conflict.
