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Market Analysis

Silver (XAG/USD) Holds Above $29.00 Amid Fed's Anticipated Rate Cuts
Amos Simanungkalit · 54.9K Views

15

Silver prices (XAG/USD) are holding steady with a positive outlook, potentially extending gains for a third consecutive day. Early European trading sees the XAG/USD pair hovering around $29.10 per troy ounce on Monday. The precious metal, known for its non-yielding nature, is gaining traction as investors analyze the Federal Reserve's monetary policy stance amid signs of moderating US inflation.

Last Friday, the US Bureau of Economic Analysis reported that US inflation had eased to its lowest annual rate in over three years. The May data for the US Personal Consumption Expenditures (PCE) Price Index showed a year-over-year increase of 2.6%, down from 2.7% in April, in line with market expectations. Similarly, Core PCE inflation also moderated to 2.6% year-over-year from April’s 2.8%, meeting consensus estimates.

Federal Reserve Bank of San Francisco President Mary Daly noted on Friday that while current monetary policies are effective, it remains premature to determine when interest rate cuts might be warranted. Daly emphasized that if inflation remains persistent or decreases gradually, interest rates would need to remain elevated for a longer period.

Uncertainties in demand from China, the largest consumer of silver, have also influenced prices. A recent official report highlighted a second consecutive month of manufacturing contraction in June, with China's National Bureau of Statistics (NBS) reporting a Manufacturing PMI of 49.5, consistent with market expectations and indicating ongoing sectoral challenges.

Conversely, a private survey painted a more optimistic picture, showing the fastest growth in China’s manufacturing sector in three years. The Caixin Manufacturing PMI rose to 51.8 in June, surpassing expectations of a slight decline from May's 51.7 to 51.2.

 

 

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

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