

Market Analysis
Silver prices (XAG/USD) maintain their intraday gains, trading around $28.00 per troy ounce during European trading hours on Monday. Non-yielding assets like Silver are bolstered as recent US inflation data has strengthened the expectation that the Federal Reserve (Fed) will begin cutting interest rates in September. Signs of cooling inflation and a softening labor market in the United States (US) have increased the likelihood of three Fed rate cuts in 2024.
On Friday, the US Personal Consumption Expenditures (PCE) Price Index showed a modest rise in inflation for June, indicating easing price pressures. The PCE Price Index increased by 2.5% year-over-year in June, down slightly from 2.6% in May, in line with market expectations. On a monthly basis, the PCE Price Index rose by 0.1% after remaining unchanged in May.
Silver's rise is also fueled by concerns over potential escalation in the Middle East following a rocket strike in the Israeli-occupied Golan Heights. According to Reuters, Israel and the US have blamed the Lebanese armed group Hezbollah for the attack.
Israel's security cabinet has authorized Prime Minister Benjamin Netanyahu's government to decide on the "manner and timing" of a response to the rocket strike, which resulted in the deaths of 12 teenagers and children on Saturday.
Additionally, Silver might be supported by news that the Chinese government plans to allocate CNY 300 billion in bond funds for economic recovery. As Silver is vital for various industrial applications in China, the world's largest manufacturing hub, this stimulus is beneficial. However, sluggish economic activity in China has added selling pressure on Silver.
Paraphrasing text from "FX Street" all rights reserved by the original author.