Silver prices (XAG/USD) encountered some selling pressure near $31.55 in early Asian trading on Monday, with global market optimism leading to profit-taking in the precious metal. Investors are now turning their attention to a speech by US Federal Reserve (Fed) Chair Jerome Powell later in the day, which could offer clues about the future direction of US interest rates.
The improved risk sentiment has dampened demand for silver temporarily, but Powell’s speech may serve as a fresh catalyst for price movements. Any indications of interest rate cuts could potentially impact silver’s trajectory in the near term.
In China, the People’s Bank of China (PBoC) announced additional stimulus measures aimed at reviving the struggling property market and boosting domestic demand. Pan Gongsheng, PBoC’s governor, signaled a reduction in bank reserve requirements, a move designed to inject liquidity into the economy. According to Amelia Xiao Fu, head of commodity markets at BOCI, silver prices could rally in the coming quarters as consecutive rate cuts and extended Chinese stimulus efforts bolster demand.
Supporting silver prices, US interest rate outlooks remain a key focus. CME FedWatch data indicates a nearly 54% probability of a half-point rate cut in November, with a 46% chance of a quarter-point cut.
Geopolitical tensions in the Middle East have also added to silver’s appeal as a safe-haven asset. Israel’s recent killing of Hezbollah leader Hassan Nasrallah has escalated tensions with Iran-backed militant groups, intensifying conflict along Lebanon’s border. The instability in the region could further support XAG/USD in the coming days.
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