Silver (XAG/USD) continued its downward trajectory on Friday, trading at approximately $28.90 per troy ounce during the Asian session. The precious metal reached a three-month low of $28.74 in the previous session, extending its losing streak that began on December 12.
Non-yielding assets like silver are facing significant pressure as central banks signal caution regarding further rate cuts. Federal Reserve Chair Jerome Powell emphasized that inflation is likely to remain persistently above the central bank‘s 2% target, leading to a more cautious outlook on future rate reductions.
The Bank of Japan (BoJ) maintained its ultra-low interest rates on Thursday amidst trade uncertainties, particularly concerns over potential tariffs under President-elect Donald Trump’s administration. Similarly, the Bank of England (BoE) kept rates unchanged, with policymakers divided on how to respond to the UK’s slowing economic growth. On Friday, the People’s Bank of China (PBoC) decided to hold its Loan Prime Rates (LPRs) steady, reflecting cautious monetary policy.
The ongoing threat of tariffs, particularly from the incoming Trump administration, has intensified concerns over weaker demand for silver as an industrial metal. This, along with a constrained industrial outlook, particularly in China’s solar panel industry due to overcapacity, has weighed heavily on silver’s performance in the fourth quarter. Photovoltaic companies in China have entered a self-discipline program to regulate supply, further impacting the metal’s industrial demand.
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