Key Takeaways:
- Weak economic growth and subdued retail sales in China may provide some relief for silver’s decline.
- Traders are closely monitoring the upcoming release of the Empire State Manufacturing Index and Federal Reserve Chair Jerome Powell’s speech for insights into silver price movements.
- The strong US dollar, fueled by reports of US political tensions and China’s economic challenges, has pressured silver prices despite expectations of Fed rate cuts.
US Dollar Strength Pressures Silver Prices Amid Fed Rate Cut Expectations
Despite growing expectations of Federal Reserve interest rate cuts starting in September, the US dollar has shown strength amid reports of an attempted assassination of former President Donald Trump. This has put downward pressure on silver prices.
Market sentiment still strongly favors a Fed rate cut in September, supported by a recent report indicating subdued US consumer inflation levels. Additionally, the US Bureau of Labor Statistics reported a 2.6% rise in the Producer Price Index (PPI) for final demand in June, exceeding the expected 2.3%.
Therefore, the strong US dollar has pressured silver prices, despite the anticipated Fed rate cuts, driven by subdued consumer inflation and a robust 2.6% rise in the PPI for final demand in June.
US Political Tensions and China’s Economic Challenges Affect Silver Prices
Political tension in the US after the reported attempt on former President Donald Trump’s life, coupled with economic problems in China, is sending mixed signals for silver prices. China’s economy grew by 4.7% in Q2 2024, down from 5.3% in the previous quarter. Retail sales in June increased by 2.0% year-over-year, below expectations.