Silver Prices Forecast: Demand Wavers as Rate Cut Hopes Face China Concerns

Silver Market at Crucial Juncture as Traders Eye Fed Policy

Silver prices are trading nearly flat on Monday as the market hovers near the critical 50-day moving average of $30.00. This level could determine the continuation or weakening of the current bull market.

At 12:08 GMT, XAG/USD is trading $30.76, down $0.02 or -0.07%.

Dollar Strength and Political Uncertainty

The dollar rose on safety bids following an attempted assassination of former U.S. President Donald Trump, potentially impacting his election odds. A stronger dollar typically makes silver more expensive for foreign buyers, pressuring prices.

Fed Policy in Focus

Traders are closely watching Fed Chair Jerome Powell’s upcoming speech and other officials’ comments this week. Markets are pricing in a 93% chance of a rate cut in September, according to the CME Fedwatch Tool. Lower interest rates tend to boost the appeal of non-yielding assets like silver.

Economic Data and Market Sentiment

Last week’s unexpected decline in U.S. consumer prices initially boosted silver to its highest level since late May. However, these gains were not sustained, with silver closing lower despite gold posting its third consecutive weekly gain. Upcoming U.S. retail sales and industrial output data could provide further direction.

China’s Economic Slowdown

China’s economy slowed in the second quarter, fueling expectations of additional stimulus measures. As a key metals consumer, China’s economic health significantly impacts silver demand.

Market Forecast

The short-term outlook for silver is cautiously bullish. While the $30.00 level has held, true support lies in the $29.27 to $28.57 zone. Strong gold prices and overall fundamentals remain supportive, but silver investors seem to be seeking additional catalysts for a significant upward move.

Traders should be prepared for potential volatility as the market navigates between conflicting signals. A break above $32.52 could pave the way for new record highs, but this may depend on clarity regarding interest rates and economic indicators. The market’s ability to defend the $30.00 level will be crucial in determining silver’s near-term direction.