Silver prices (XAG/USD) remained relatively stable during Tuesday’s Asian session, trading around $27.80 per troy ounce. Market participants are closely watching for the US Federal Reserve’s (Fed) policy decision scheduled for Wednesday.
Limited Downside Expected for Silver
The downside for non-yielding assets like silver may be constrained, as the Federal Reserve is anticipated to start cutting interest rates in September. Expectations of three rate cuts in 2024 have been fueled by signs of cooling inflation and easing labor market conditions in the US. Conversely, the Bank of Japan (BoJ) is projected to raise rates by ten basis points, while opinions remain divided on whether the Bank of England (BoE) will begin reducing borrowing costs.
Upcoming US Economic Data
Traders are awaiting key US economic data this week. Nonfarm Payrolls for July are expected to increase by 175,000 jobs, down from 206,000 in June. The Unemployment Rate is forecasted to hold steady at 4.1%, matching highs from 2021. Additionally, Average Hourly Earnings are projected to rise by 0.3% month-over-month.
Market Pressures and Geopolitical Concerns
Recent disappointing GDP figures and an unexpected rate cut by the People’s Bank of China (PBOC) have exerted additional selling pressure on silver. Given silver’s critical role in various industrial applications, especially in China, the world’s largest manufacturing hub, these developments have heightened concerns about demand.
Furthermore, silver prices are facing pressure from diminishing concerns over Middle East tensions. Israel has indicated a measured response to a Hezbollah rocket strike in the Israeli-occupied Golan Heights, aiming to avoid a full-scale war, as reported by Reuters. US diplomatic efforts to limit Israel’s response and prevent strikes on Beirut or major civilian infrastructure in Lebanon have also contributed to the easing of geopolitical concerns.
