Silver Drops Near $29.50, Faces Pressure from Moderate Fed Hawkishness
Silver prices fell near $29.30 in Europe on Tuesday (12/24), although they remained within Monday’s trading range amid thin trading volumes due to the holidays on Wednesday and Thursday due to Christmas Eve and Thanksgiving Day. The white metal has been under broad pressure as the Federal Reserve (Fed) has been steering a moderately hawkish stance on its monetary policy outlook.
The Fed has shifted from “dovish” to “cautious” on interest rates as progress in the disinflationary trend has stalled in the past three months, and labor market conditions are not as bad as they appeared at its September meeting. In addition, policymakers view President-elect Donald Trump’s immigration, tariffs and tax policies as inflationary for the economy.
In its latest dot chart, the Fed is tapping two rate cuts for 2025, which analysts at UBS say will happen in June and September.
Meanwhile, the US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, fluctuated in a tight range above 108.00. The yield on the 10-year US Treasury note fluctuated near its highest level in more than six months around 4.6%. Strong yields on interest-bearing assets weigh on non-yielding assets, such as Silver, as they carry a higher opportunity cost for them.
Source: FXStreet
