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Silver drops 2% as investment demand tapers off
AI Summary
- Silver prices dropped nearly 2% in the European market due to profit-taking and slowing investment demand for safe-haven assets
- US dollar weakened in the foreign exchange market despite expectations of at least two interest rate cuts before the end of the year
- Investors are closely watching US inflation data and labor market figures to guide Federal Reserve's monetary policy decisions
Silver prices lost nearly 2% in the European market on Monday at the start of the week, retreating from a two-week high due to profit-taking and correction, amid slowing investment demand for safe-haven assets as optimism grew over the success of US–Russia talks to end the war in Ukraine.
The decline in silver prices came despite the US dollar’s weak performance in the foreign exchange market, under pressure from strong expectations of at least two US interest rate cuts before the end of this year.
Price Overview
• Today’s silver prices: Silver fell by about 2.0% to $37.61, down from the opening level of $38.36, after hitting an intraday high of $38.38.
• On Friday’s settlement, silver gained about 0.25%, marking its sixth consecutive daily rise, and reached a two-week high of $38.51 per ounce on Thursday.
• Last week, silver rose 3.6%, posting its first weekly gain in a month, supported by a weaker US dollar amid a series of weak economic data releases in the United States.
US–Russia Negotiations
As part of diplomatic efforts to end the war in Ukraine, US President Donald Trump announced on Friday that he will meet Russian President Vladimir Putin on August 15 in Alaska to discuss ways to reach a peace agreement to end the ongoing military conflict.
This move comes within a series of intensive US–Russia negotiations aimed at finding a final resolution to the crisis, amid international anticipation over the success of these efforts.
US Dollar
The US dollar index fell by more than 0.2% on Monday, nearing a two-week low of 97.95 points, reflecting a decline in the US currency’s value against a basket of major and minor counterparts.
Attention remained focused on trade talks as the August 12 deadline set by Trump to reach an agreement between the United States and China approached.
US Interest Rates
• According to the CME Group’s FedWatch Tool: the probability of a 25-basis-point rate cut at the September meeting is currently priced at around 88%, while the chance of no change is at 12%.
• The probability of a 25-basis-point rate cut at the October meeting is currently at 96%, with a 4% chance of no change.
• To reassess these expectations, investors this week are awaiting the release of key US inflation data, which, along with labor market figures, will guide the Federal Reserve’s monetary policy decisions.
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