In Monday’s European trading session, the price of silver (XAG/USD) experienced a significant decline of more than 5%, dropping below the $28.00 mark. This sharp drop led the white metal to hit nearly a three-month low, driven by escalating fears of a worldwide economic slowdown following a series of concerning economic indicators from the United States.
The recent data from the US painted a grim picture, indicating sluggish labor market demand and notable weaknesses in the manufacturing sector. The US Unemployment Rate surged to its highest level since November 2021, reaching 4.3%. Additionally, the Manufacturing Purchasing Managers’ Index (PMI) for July contracted more rapidly, falling to 46.8. Silver, a metal with diverse applications in industries like electric vehicles, renewable energy, and telecommunications, faced diminished demand amidst these economic uncertainties.
Investors have been particularly wary of silver’s demand trajectory due to China’s economic fragility. The Chinese economy is grappling with subdued demand both domestically and in international markets, adding to the concerns about silver’s future prospects.
Despite a sharp downturn in US bond yields and the US Dollar, prompted by mounting speculation that the Federal Reserve will implement significant rate cuts during its upcoming September meeting, silver prices failed to rally. The 10-year US Treasury yields tumbled to around 3.67%, while the US Dollar Index (DXY), which measures the dollar against six major currencies, dropped to its lowest level in over a year, nearing 102.60.
The convergence of these factors has created a challenging environment for silver prices, as global economic uncertainties and shifting monetary policies continue to weigh heavily on the metal’s market performance. Investors are closely monitoring developments, including the Fed‘s upcoming decisions, as they navigate the evolving landscape in the precious metals market.
