Silver Holds Positive Amid Strong China Data
Silver prices held steady after three consecutive days of gains, trading near $30.80 per troy ounce during the Asian session on Friday (17/1). Industrial demand for the grey metal is likely to continue to rise, supported by strong economic data from China.
China’s Industrial Production grew by 6.2% year-on-year in December, beating market expectations and the 5.4% growth rate recorded in November. This marked the fastest growth in industrial output since April, largely driven by stronger manufacturing activity following stimulus measures introduced in September.
Furthermore, China’s Gross Domestic Product (GDP) grew by 5.4% YoY in Q4 2024, up from 4.6% in Q3. On a quarterly basis, the economy expanded by 1.6% in Q4, in line with market expectations, compared with a 0.9% increase in the previous quarter.
The non-yielding metal gained support amid growing expectations that the Federal Reserve (Fed) will cut interest rates this year. The dovish outlook for the Fed gained traction following weaker-than-expected US Retail Sales data released on Thursday. Retail sales rose 0.4% month-on-month (MoM) in December, totaling $729.2 billion. This was lower than market expectations for a 0.6% increase and lower than the previous month’s 0.8% increase (revised from 0.7%).
S, lower-than-expected underlying inflation in the US has fueled speculation that the Fed could implement two more interest rate cuts this year. The core Consumer Price Index (CPI), which excludes volatile food and energy prices, rose 3.2% year-on-year (YoY) in December, slightly below the previous month’s 3.3% increase and market expectations of 3.3%. On a monthly basis, core CPI grew 0.2%, compared with a 0.3% increase in the previous month.
Silver, a non-interest-bearing asset, found additional support as the yields on the 2-year and 10-year US Treasury bonds stood at 4.23% and 4.60%, respectively, at the time of writing. Both yields are on track for a weekly decline of over 3%.
The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, hovered near 109.00 and remained subdued for the fifth straight session. A weaker USD makes Silver more affordable for buyers using foreign currencies, boosting demand for the precious metal.
Furthermore, expectations of lower interest rates spilled over into the United Kingdom (UK), where economic data showed mixed signals. The UK GDP grew by 0.1% month-on-month (MoM) in November 2024, recovering from a contraction of 0.1% in October and September. However, the growth fell short of the anticipated 0.2% increase.
Source: FXStreet
