Silver prices have been on a downward trend in the past couple of days as investors exercise caution in anticipation of key economic indicators from the US. The metal is trading at around $31.40 per troy ounce in Asian markets. This cautious approach is due to the impending release of US GDP Annualized data for the first quarter, set to be unveiled on Thursday, as well as the Core Personal Consumption Expenditures (PCE) Price Index figures on Friday.
The projected US economic growth for the first quarter is estimated to be at 1.3%, lower than the previous quarter’s 1.6% rise. Furthermore, the Core PCE is expected to show a 0.3% month-over-month increase and a 2.8% year-over-year rise in April. The hawkish remarks from Federal Reserve officials have heightened concerns about potential rate hikes, causing risk aversion sentiment among investors. This has led to increased US Treasury yields, impacting non-yielding assets like Silver.
Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, hinted at the possibility of a rate hike, expressing doubts about the disinflationary trend. Similarly, Atlanta Fed President Raphael Bostic mentioned that the path to 2% inflation is not guaranteed, emphasizing the significance of price gains. These statements have contributed to the uncertainty surrounding future monetary policy decisions and their potential impact on the markets.
Amidst these economic uncertainties, geopolitical tensions in the Middle East could provide some support for safe-haven assets like Silver. The Israeli military recently announced its operational control over the Philadelphi Corridor, a crucial strip of land along the border between Gaza and Egypt. Such developments in the region could trigger an increase in demand for safe-haven assets, offering some respite for Silver prices in the midst of other market pressures.
In conclusion, Silver prices have been under pressure due to investors’ caution ahead of key economic data releases from the US and hawkish remarks from Fed officials. While the outlook for Silver remains uncertain, geopolitical tensions in the Middle East could potentially limit the losses of the safe-haven asset. As the market continues to digest economic indicators and monitor geopolitical developments, Silver prices are likely to remain volatile in the near term. Investors should exercise caution and stay informed about the factors influencing the precious metal’s performance in the current economic landscape.
