The price of silver (XAG/USD) continued its downward trend near $29.00 during the Asian trading session on Tuesday. The decline comes as concerns grow over a sluggish Chinese economy, impacting industrial demand for the white metal.
Recent economic data from China has raised alarms among investors, with the country reporting weaker-than-expected GDP growth for the second quarter and the slowest increase in retail sales since 2022. Given China’s significant role as a consumer of industrial metals, these developments have exerted downward pressure on silver prices in recent sessions.
Meanwhile, market focus is turning towards upcoming economic indicators from the United States. Key data releases later this week, such as the initial reading of the US S&P Global Purchasing Managers Index (PMI) for July, second-quarter Gross Domestic Product (GDP), and the Personal Consumption Expenditures Price Index (PCE) for June, are anticipated to provide further direction for silver prices.
Adding to market dynamics, expectations of potential rate cuts by the Federal Reserve have emerged as a supporting factor for silver. Comments from New York Fed President John Williams and Fed Governor Christopher Waller suggesting the Fed is nearing its desired level for rate adjustments have bolstered speculations. Traders in the Fed Funds Futures markets have fully priced in rate cuts as early as September, with additional reductions expected in 2024, as indicated by the CME FedWatch Tool.
Furthermore, political uncertainties following US President Joe Biden’s decision to withdraw from the 2024 election race are also contributing to the market sentiment. Such uncertainties often prompt investors to seek safe-haven assets like silver, thus providing temporary support to its price.
While industrial demand concerns stemming from China’s economic slowdown weigh on silver, expectations of Fed rate cuts and political uncertainties in the US are likely to influence its near-term price movements. Investors are keenly awaiting upcoming economic data releases for further clarity on silver’s future trajectory.
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