Silver is down by more than 5%, skidding below $28.00 in Monday trading. XAGUSD took a nosedive to an almost three-month low as fears of a global economic slowdown have intensified following a string of US economic data that indicated the nation is moving towards a recession.
Economic Indicators and Market Reactions
Recent US data showed signs of slower labour demand and sheer weakness in the manufacturing sector. The Unemployment Rate rose to its highest since November 2021 at 4.3%. Meanwhile, the Manufacturing PMI for July contracted at a faster pace to 46.8.
The demand for silver as a metal relies on its application in various industries, such as electric vehicles, renewable energy, wires, and cables. Investors have remained concerned over silver’s demand due to China’s economic vulnerability. The Chinese economy is going through a rough phase due to weak demand in the domestic and overseas markets.
Meanwhile, a sharp decline in US bond yields and the Dollar due to growing speculation that the Federal Reserve will deliver a bulk rate-cut in its September meeting, failed to lift the price of silver. The 10-year Treasury yields plunged to near 3.67%, while the DXY Dollar Index, which tracks the greenback’s value against six major currencies, plummeted to more than the annual low near 102.60.
Silver daily chart by TradingView
(Source: OANDA)
