Market Analysis

Silver prices retraced their recent gains, trading around $30.50 per troy ounce during the Asian session on Tuesday. An upward correction in US Treasury yields dampened demand for non-yielding assets like silver.

However, the losses in silver prices may be limited due to growing expectations of interest rate cuts by the Federal Reserve (Fed) in 2024. This sentiment is bolstered by an unexpected drop in the ISM Manufacturing PMI to 48.7 in May, down from April's reading of 49.2 and below the forecast of 49.6. The US manufacturing sector experienced its second consecutive month of contraction, marking the 18th contraction in the last 19 months.

Traders are increasingly betting on the possibility of rate cuts by the Fed this year. According to the CME FedWatch Tool, there is nearly a 60% probability that the Fed will lower the policy rate by at least 25 basis points in September.

The safe-haven appeal of silver has been affected by easing tensions in the Israel-Hamas conflict in the Middle East. As reported by Reuters on Monday, the US is seeking support from the United Nations Security Council for President Joe Biden's proposal to halt the fighting between Israel and Palestinian militants Hamas in the Gaza Strip. Israeli Prime Minister Benjamin Netanyahu's administration reluctantly accepted President Biden's cease-fire proposal for Gaza on Sunday.

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Paraphrasing text from "FX Street" all rights reserved by the original author.