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MTrading Team • 2024-01-23

Silver Prices Down 2% due to Delayed Rate Cuts

Silver Prices Down 2% due to Delayed Rate Cuts

Some analysts state the growing selling pressure in the silver market. It was triggered by several crucial factors. The first one involves worries about China's economy. The second refers to changing expectations for the Federal Reserve's first rate decrease in the upcoming easing cycle.

Nevertheless, despite silver's notable underperformance within the precious metals industry, some experts suggest the decline may represent more purchasing opportunities.

Overnight, Chinese investors began selling silver. Analysts say it might be a factor in the metal's industrial demand due to growing concerns about China's weakening economy. The country refused to change its current monetary policy.

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It means we are unlikely to see the ease in the near future. However, this fact did not have a negative impact on metals. What’s more, China is still among the top commodity consumers and the sinking economy can still be to the detriment of demand for metals.

As for silver, the possibility of a rate decrease by the FED in March caused the grey metal to drop to new session lows ahead of the North American trading session. Markets anticipate a less than 50% chance of a rate cut in March, per the CME FedWatch Tool.

Silver may be vulnerable to speculative selling if markets reduce their expectations for this year's projected rate decreases in interest rates. The Canadian bank does, however, believe that silver has a lower bound.

Due to its decline in price, silver is becoming less desirable as a financial and industrial metal. However, some market participants consider it an attractive bargain from the long-term perspective.

May the trading luck be with you!