Silver price is facing a downward trend due to cautious trading ahead of the US Core PCE release. The hawkish Fed has led to an increase in US Treasury yields, weakening the demand for non-yielding assets like Silver. The higher US Dollar has also impacted the demand for the grey metal as it becomes more expensive for foreign buyers. With Silver trading around $31.10 per troy ounce during the European session on Friday, concerns about potential rate hikes have been raised.
The hawkish comments from Federal Reserve officials, particularly from Dallas Fed President Lorie Logan, have highlighted the upside risks to inflation despite recent easing. Federal Reserve officials emphasize the need for flexibility and keeping all options on the table as they monitor data to determine their response. Atlanta Fed President Raphael Bostic also noted the uncertainty of reaching the 2% inflation target and the significant breadth of price gains, as reported by Bloomberg. These remarks have added to the cautious trading atmosphere for Silver.
Furthermore, the strengthening US Dollar has made Silver more costly for foreign buyers, leading to decreased demand and subsequently lower prices. The US Dollar Index (DXY), which measures the value of the USD against other major currencies, is trading higher around 104.80. This, alongside the 4.94% and 4.56% yields on 2-year and 10-year US Treasury bonds respectively, is impacting the demand for Silver. Despite the US GDP being revised lower and weekly initial jobless claims slightly exceeding market expectations, investors are closely watching the Core PCE Price Index release on Friday.
Overall, as Silver continues to face downward pressure, traders are exercising caution amidst the hawkish Fed stance and increasing US Treasury yields. The higher US Dollar is impacting the demand for the grey metal, making it more expensive for foreign buyers. With concerns about potential rate hikes and uncertainties surrounding inflation, Silver prices are likely to remain under pressure in the near term. Investors will be closely monitoring economic data releases, particularly the Core PCE Price Index, to gauge the future direction of Silver prices and potential policy responses from the Federal Reserve.
