The Spot silver price drifts lower to around $31.20, snapping the two-day winning streak during the early European session on Thursday. The cautious stance on cutting rates by the Federal Reserve (Fed) weighs on the white metal.
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- Silver price attracts some sellers to near $31.20 in Thursday’s early European session, down 0.30% on the day.
- The cautious approach to rate cuts by the Fed drags the Silver price lower.
- Rising industrial demand for Silver might help limit its losses
Federal Chair Jerome Powell said on Wednesday that the US economy’s strength means the US central bank can afford to be a little more cautious” about decisions on rate moves. Joseph Brusuelas, chief economist at RSM US, noted that he doesn’t expect further rate cuts after the December meeting until March 2025 at the earliest.
The rising bets of less aggressive Fed rate cuts could support the Greenback and undermine the USD-denominated commodity price. The markets are now pricing in a 76% chance that the central bank would cut rates by a quarter point at its December 17-18 meeting, according to the CME FedWatch tool.
On the other hand, the silver market is expected to experience a supply deficit for the fourth consecutive year due to robust demand. This, in turn, might provide some support to the Silver price. Carsten Fritsch, a precious metals analyst at Commerzbank, said, “Silver demand for photovoltaics has more than doubled in the last three years and now almost equals the demand for bars and coins.” Fritsch added that the rising industrial demand is likely to boost physical silver demand this year, reaching its second-highest level after 2022.
