- Silver prices are consolidating as traders are cautious ahead of central bank interest rate decisions.
- The Fed is expected to make no changes on Wednesday, while the BoJ could raise rates by 10 basis points.
- Disappointing economic outlook in China weakens demand for Silver.
Silver (XAG/USD) price remains tepid in the second consecutive session, trading around $27.80 per troy ounce during Asian hours on Tuesday. Traders are awaiting the US Federal Reserve (Fed) monetary policy decision scheduled for Wednesday.
However, the downside for non-yielding assets like Silver could be limited as the Federal Reserve (Fed) is expected to start cutting interest rates in September. Moreover, signs of cooling inflation and easing labor market conditions in the United States (US) have raised expectations for three rate cuts by the Fed in 2024. Meanwhile, the Bank of Japan (BoJ) is anticipated to hike rates by ten basis points. Opinions are divided on whether the Bank of England (BoE) will start reducing borrowing costs.
Traders are anticipating key U.S. data this week. Nonfarm Payrolls are expected to rise by 175,000 jobs in July, down from 206,000 in June. The unemployment rate is projected to remain steady at 4.1%, matching 2021 highs. Additionally, average hourly earnings are forecast to rise 0.3% month-on-month.
Disappointing GDP figures and an unexpected rate cut by the People’s Bank of China (PBoC) last week have added further selling pressure on Silver. Since Silver is essential for numerous industrial applications, especially in China, the world’s largest manufacturing hub, these developments have heightened concerns about demand.
In addition, safe-haven silver prices are facing pressure as concerns over Middle East tensions have eased. Israel has indicated that its response to a Hezbollah rocket attack on the Israeli-occupied Golan Heights on Saturday will be measured to avoid an escalation into a full-scale war, according to Reuters. This stance has been supported by a U.S. diplomatic effort to limit Israel’s response, with the aim of avoiding attacks in Beirut or on important civilian infrastructure in Lebanon.
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.
