Silver sharpens decline to five-week trough on industrial demand concerns

Silver prices declined in European trade for the third straight session, hitting five-week lows and on track for the largest weekly loss since October 2022 on concerns about industrial demand on the white metal.

Prices are also pressured by a stronger dollar following a spate of bullish remarks by Fed officials which hurt chances of a Fed rate cut this year. 

Silver Prices Today

Silver prices fell 1.8% to $23.74 an ounce, the lowest since April 3, with a session-high at $24.19 a barrel, after losing 4.8% yesterday, the second loss in a row, and the largest since February 2021. 

Weekly Trading

Silver prices are now down 7.5% so far this week, on track for the third weekly loss in a month, and the largest since October 2022.

Industrial Demand

Indices that track solar panels companies tumbled to seven-month lows as profits weaken, triggering concerns about demand on silver as these companies are among the highest consumers of silver in modern industries. 

Silver is a major component in solar panel manufacturing, with a large amount of silver used in such processes, amounting to 20 grams of silver to produce a single solar cell at one watt capacity. 

The amount of silver used depends of the type of solar cells and the technology involved, but overall the industry uses upwards of 150 tones of silver a year. 

Chinese Economy

Recent Beijing data showed consumer prices in China fell to two-year lows in April, while producer prices tumbled to three-year lows. 

Such disappointing data come as Chinese factories continue to suffer and reduce output, triggering concerns about performance in the second quarter of the year. 

The Dollar

The dollar index rose 0.1% today, maintaining gains for another session and almost surpassing one-week highs at 102.15 against a basket of major rivals. 

Minneapolis Fed President Neil Kashkari said that US inflation remains much higher than the 2% target, while the labor sector maintains strength.

He said that an extended period of interest rate hikes and inverted yield curves could pressure banks even further, but might be necessary if inflation remained high. 

Such remarks hit chances of a Fed rate cut in the second half of the year, making it more likely that interest rates will hold high through 2024.