Rate Cut Impact: Silver Weakens Alongside Gold
Silver prices corrected after the Federal Reserve (The Fed) officially cut its benchmark interest rate. This surprised some market participants, as lower interest rates typically support higher precious metal prices.
The decline in silver was due to several fundamental factors. First, the market was perceived to have anticipated the cut well in advance. The Fed's decision, which met expectations, instead triggered profit-taking at resistance levels after a prolonged rally in recent weeks.
Furthermore, Fed Chairman Jerome Powell's cautious tone weighed on sentiment. Powell emphasized that this cut did not signal the beginning of a long cycle of interest rate cuts. This statement caused investors to revise expectations again, pushing bond yields up and the US dollar stronger. This pressured the price of silver, which is priced in dollars.
On the other hand, global markets also viewed the Fed's move as a sign of optimism about the economy. This prompted a shift in funds to riskier assets such as stocks, thereby reducing interest in silver as a safe-haven asset.
Additionally, silver, which serves a dual purpose as a precious metal and an industrial commodity, is also under pressure from concerns about a global economic slowdown. If industrial demand weakens, the silver price outlook will also be depressed.
Analysts predict that silver price volatility will remain high in the short term. "While interest rate cuts should be positive, the strengthening dollar, rising yields, and the Fed's hawkish tone are causing silver to lose momentum," said one commodity analyst.
Source: Newsmaker.id
