Silver Price Update
Silver prices continued their downward trajectory for the second consecutive session, hovering around $30.30 per troy ounce in early European trading on Thursday. The decline in the price of the grey metal was attributed to a shift away from non-yielding assets, spurred by hawkish sentiment emanating from the Federal Open Market Committee (FOMC) Meeting Minutes.
The FOMC expressed apprehension regarding the persistent inflationary pressures, which have surpassed initial expectations at the onset of 2024. Consequently, the Fed appears reluctant to enact interest rate cuts, fostering uncertainty among traders regarding the possibility of multiple rate reductions throughout the year.
According to the CME FedWatch Tool, the likelihood of a 25 basis-point rate cut by the Federal Reserve in September has marginally decreased to 50.7%, down from 51.6% recorded a day earlier. Federal Reserve Bank of Boston President Susan Collins underscored the prolonged timeline for interest rate adjustments, advocating for a patient approach by the Fed, as reported by Reuters.
Market Analysis
The current geopolitical landscape, particularly the assumption of office by Lai Ching-te as Taiwan’s new president, has heightened tensions. Chinese state media reports indicate increased military activity, including the deployment of fighter jets and simulated strikes in the Taiwan Strait and surrounding areas controlled by Taiwan. Such geopolitical uncertainties typically foster risk aversion among investors, prompting a surge in demand for safe-haven assets like Silver.
In light of escalating geopolitical tensions, Silver may witness heightened demand, as investors seek refuge from market volatility.
