Silver prices declined to two-year lows on Friday away from the psychological level of $20 an ounce.

The losses were led by the dollar, the global central banks, and Chinese economy. 

Silver Prices

Silver prices declined to $19.37 an ounce as of July 1, the lowest since July 2020.

Silver lost over 18% in the second quarter of the year, the first quarterly loss in three quarters, and the largest since the first quarter of 2020.

The Dollar

The dollar index surged to two-week highs at 105.64, the highest in 20 years at 105.79.

Higher US dollar is pressuring mineral and commodity prices considerably as they become costlier to holders of other currencies. 

Global Central Banks 

Global Central Banks are still moving to control runaway inflation and tightening monetary policies in response. 

The Fed took a historic decision last month to hike rates by 0.75% to 1.75%, the highest hike since 1994.

Bank of England hiked rates by 25 basis points to 1.25%, the fifth such increase in a row.

Swiss Central Bank decided to hike rates by 50 basis points at the June 16 meeting to minus 0.25%, the first such increase since 2007, while analysts expected no change at minus 0.75%.

Higher interest rates weaken demand on gold prices as it becomes less attractive as an investment.

China's Economy 

As weak data from China continues to mount and point to a slowdown in economic growth, demand is expected to slow as well on the white metal.

Estimates 

Silver prices are expected to decline to $18 and maybe less after giving up $20 already as the dollar strengthens. 

Gold prices declined in European trade, resuming its march back towards six-month lows on Indian demand concerns as the Indian government hikes taxes on imported gold. 

Losses are contained by a tumble in US 10-year treasury yields, underpinning gold. 

Prices Today

Gold prices declined 0.4% to $1,803 an ounce, after rising 0.2% on Friday, the first profit in five sessions after marking six-month lows earlier at $1,785. 

Gold prices declined 0.9% last week, the third weekly loss in a row as haven demand weakens. 

Indian Demand

The Indian Government decided to hike import taxes on gold to 12.5% from 7.5% to control demand. 

Gold traders discounted prices considerably recently to boost weak demand, with the new decision expected to tank demand even more. 

US Yields

US 10-year treasury yields fell 4.25% on Friday for the fourth straight session to four-week lows at 2.791%, underpinning gold prices. 

Recent US data showed US manufacturing PMI tumbled to 53 from 56.1, spreading concerns about US economic performance. 

The SPDR 

Gold holdings at the SPDR Gold Trust fell 8.41 tones on Friday, the ninth decrease in a row to a total of 1,041 tones, the lowest since February 28. 

Euro rose in European trade against major rivals off two-week lows against dollar amid positive outlook for ECB rate hikes.

Dollar is also declining against most rivals as Fed rate estimates reach a peak and round out following the June's meeting.

EUR/USD rose 0.25% to 1.0445, with a session-low at 1.0417, after falling 0.5% on Friday to two-week lows at 1.0366.

Euro lost 1.2% last week against dollar, the fourth weekly loss in a row on divergent policies between Europe and the US.

Positive Outlook 

ECB members expect their ability to control inflation without causing a recession.

The remarks bolster similar statements by ECB President Christine Lagarde, which paved the way for a 0.25% rate hike at the July meeting, and a similar one at the September meeting. 

The Dollar

The dollar index fell 0.2% on Friday off two-week highs at 105.64 against a basket of major rivals. 

Recent data showed the US manufacturing PMI declined sharply to 53 from 56.1, bolstering the case for US recession in the second quarter.

ECB's last meeting minutes will be released soon and will offer clues on the path forward in monetary policies. 

Oil futures tilted higher in Asian trade as the dollar index backed off June 15 highs amid a lack of data today from the US while investors assess developments in China and the Ukrainian crisis. 

As of 06:13 GMT, US crude futures due in August rose 0.13% to $108.94 a barrel, while Brent September futures rose 0.55% to $112.22 a barrel, as the dollar index shed 0.07% to 105.06.

Covid 19 cases surged once more in China, triggering concerns once more about another lockdown in major cities. 

Latest World Health Organization data showed Covid 19 infections rose to 545 million cases worldwide, with the death toll hitting 6.33 million.

On the Ukrainian front, Ukrainian troops withdraw from the east officially with Russia about completely seize Lohansk.

Otherwise, OPEC + decided last week to maintain previous decision to increase output by 648 thousand bpd in July and August. 

Baker Hughes data showed the US oil rigs rose by one rig last week to 595 rigs, the highest since March 2020, with rigs increasing for the 23rd month in a row, while production rose 100 thousand bpd to 12.1 million bpd, the highest since April 2020. 

US oil production fell 0.9 million barrels, or 8% from record highs at 13.1 million bpd in March 2020, while hitting record lows in August 2020 at 9.7 million bpd before recent recovery.