- Silver price loses ground as higher US Treasury yields increase the opportunity cost of holding precious metals.
- Demand for dollar-denominated Silver struggles due to the improving US Dollar.
- Non-yielding Silver received support on Thursday after the Fed announced a 25 basis point rate cut.
The price of Silver (XAG/USD) loses ground to around $31.70 per troy ounce during Asian hours on Friday. A modest rise in US Treasury yields is adding downward pressure on non-yielding assets like Silver, as higher yields increase the opportunity cost of holding precious metals. At the time of writing, the 2-year and 10-year US Treasury yields stand at 4.20% and 4.33%, respectively.
Additionally, demand for dollar-denominated Silver struggles, as a stronger US Dollar (USD) makes the precious metal more expensive for buyers using foreign currencies. The Dollar Index (DXY), which measures the value of the US dollar against the other six major currencies, is advancing to near 104.50 at the time of writing.
Traders await possible stimulus measures from China as the Standing Committee of the National People’s Congress concluded its five-day meeting. Earlier this week, media reports suggested that the potential stimulus package could exceed 10 trillion yuan. As one of the world’s largest manufacturing centers for electronics, solar panels and automotive components, China could have greater demand for Silver.
However, non-yielding Silver prices gained ground following the Federal Reserve’s recent rate cut. The Federal Open Market Committee (FOMC) lowered its benchmark overnight lending rate by 25 basis points (bps) to a target range of 4.50%-4.75% at its November meeting on Thursday.
Additionally, Federal Reserve Chairman Jerome Powell indicated that the central bank is proceeding with interest rate cuts, given the current rigidity of monetary policy. Investors are now anticipating the release of the preliminary US Michigan Consumer Sentiment Index, which is expected later on Friday.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
