During Monday’s European trading session, silver prices extended their decline to approximately $30.20 per troy ounce. The downturn followed the release of US Personal Consumption Expenditure (PCE) data on Friday, which indicated a moderation in price pressures for April, prompting a sell-off in the grey metal.
The Federal Reserve (Fed) faces challenges in meeting its 2% inflation target, with mixed inflation data failing to signal a potential rate cut. Elevated interest rates are particularly impacting non-yielding assets like silver.
Last week, Federal Reserve representatives hinted at a prolonged tight monetary policy stance to achieve inflation objectives. Atlanta Fed President Raphael Bostic emphasized the need for continued restraint, foreseeing a gradual decline in inflation forecasts. Similarly, New York Fed President John Williams expressed confidence in the current policy’s ability to steer inflation back to target levels despite present inflationary pressures.
The recent agreement by Israeli Prime Minister Benjamin Netanyahu’s administration to accept US President Joe Biden’s Gaza cease-fire proposal has added to silver’s woes. This move, amidst ongoing conflict, may divert investor attention towards riskier assets, dampening demand for safe-haven commodities like silver.
As silver weakens amid inflation data and Fed policy uncertainties, market participants remain watchful for further developments in global geopolitics and monetary policy dynamics.
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