Silver Price Forecast: XAG/USD edges lower to near $31.00 due to China’s concerns

LONDON (July 17) Silver price (XAG/USD) retraces its recent gains, trading around $30.90 per troy ounce during the European hours on Wednesday. The grey metal faces challenges due to a slowing Chinese economy, the world's largest manufacturing hub. China's industrial demand for Silver is significant, as it is essential in various applications such as electronics, solar panels, and automotive components.

China's Gross Domestic Product (GDP) grew 4.7% year-over-year in the second quarter, compared to a 5.3% expansion in the first quarter and an expected 5.1%. This marks the slowest growth since the first quarter of 2023.

The third plenum of the Chinese Communist Party's 20th National Congress, held from July 15 to 18, has so far indicated no major changes in the economic strategy of top consumer China. President Xi Jinping urged the Communist Party to maintain "unwavering faith and commitment" to its strategic agenda.

Standard Chartered anticipates that the People's Bank of China (PBoC) will implement cuts in both interest rates and the reserve requirement ratio (RRR) as GDP growth decelerates in the second quarter. China's growth drivers remain uneven, and trade tensions are escalating, with the US and EU imposing new tariffs on Chinese electric vehicles (EVs).

Additionally, Silver prices struggle due to the emergence of the hawkish sentiment surrounding the Federal Reserve (Fed) policy stance after the speech from Federal Reserve (Fed) Board of Governors member Dr. Adriana Kugler on Tuesday. Dr. Kugler indicated that if upcoming data does not confirm that inflation is moving toward the 2% target, it may be appropriate to maintain current rates for a while longer.

FXStreet