- Silver price rises due to dovish sentiment surrounding the Fed regarding its monetary policy stance.
- Fed Chairman Jerome Powell said inflation is on track to sustainably meet the Fed’s target.
- Silver demand could face challenges as China’s economy grew less than expected in the second quarter.
Silver (XAG/USD) price halts its two-day losing streak, trading around $30.80 per troy ounce during early European hours on Tuesday. This upward move is attributed to Federal Reserve Chairman Jerome Powell’s dovish comments regarding the monetary policy stance, which has increased the attractiveness of precious metals. Lower borrowing costs make non-yielding assets like Silver more attractive to investors.
Fed Chair Jerome Powell said Monday that three U.S. inflation readings this year “increase some confidence” that inflation is on track to sustainably meet the Fed’s target, suggesting a shift toward interest rate cuts may not be far off.
In addition, Federal Reserve Bank of San Francisco President Mary Daly said inflation is cooling in a way that reinforces confidence that it is on track to 2%. However, Daly added that more information is needed before a rate decision is made.
According to the CME Group’s FedWatch tool, markets are now pricing in an 85.7% chance of a 25 basis point rate cut at the Fed’s September meeting, up from 71.0% a week ago. Investors are likely to watch US retail sales data for June, due later in the day, for more insight into the US economic situation.
The price of the grey metal may face challenges as economic data on Monday showed China’s economy grew less than expected in the second quarter and weak domestic demand. Silver is essential in several industrial applications, such as electronics, solar panels and automotive components. Given China’s status as one of the world’s largest manufacturing hubs, the country’s industrial demand for silver is significant.
The third plenary session of the 20th National Congress of the Chinese Communist Party continues today, running from July 15-18. Standard Chartered expects cuts from the People’s Bank of China to rates and the reserve requirement ratio (RRR) as GDP growth slowed in the second quarter. China’s growth drivers remain uneven and trade tensions are rising, with the US and EU imposing new tariffs on Chinese electric vehicles (EVs).
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.
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