Silver (XAG/USD) continues to trade in negative territory, hovering around $30.35 during the early European session on Friday. The precious metal remains under pressure due to the stronger US Dollar (USD), with traders awaiting the release of October’s US Retail Sales report for fresh direction. Comments from Federal Reserve officials will also be closely scrutinized for potential clues on the future path of US interest rates.
The US Dollar has gained significant strength following last week’s US presidential election, where Donald Trump’s victory raised expectations of inflationary tariffs and other fiscal measures under his incoming administration. As a result, the US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, is holding near 106.80, after reaching a year-to-date high of 107.05 in the previous session. In addition, US 10-year Treasury bond yields have climbed to 4.48%, their highest level since July. This resurgence in USD demand is putting pressure on silver, as a stronger dollar makes the metal more expensive in other currencies, potentially dampening global demand.
On the supply side, investors were disappointed by the outcome of China’s recent National People’s Congress (NPC) meeting, which failed to deliver the expected fiscal stimulus measures. As the world’s largest importer of silver, any weakness in China’s economy could weigh on silver prices, especially amid concerns over sluggish demand from the region.
However, there are positive factors for silver, particularly in industrial demand. The Silver Institute and consultancy Metals Focus forecast a 7% year-on-year increase in industrial silver demand in 2024, reaching 700 million ounces. Additionally, analysts predict a global silver market deficit of around 182 million ounces next year, marking the fourth consecutive year of shortfall. This sustained industrial demand could offer some support to silver prices in the near term.
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