Silver Price Forecast: XAG/USD declines below $27 as demand concerns escalate

LONDON (August 6) Silver price (XAG/USD) skids below the crucial support of $27.00 in Tuesday’s European session. The white metal weakens as investors worry about the growing demand for Silver as a metal, which has applications in various industries, such as Electric Vehicles (EV), Renewable Energy, wires and cables, etc.

Market participants remain concerned over fears of a global slowdown as major economies face a slump in domestic demand. After China and the Eurozone, investors worry that the United States (US) could enter a recession due to the long maintenance of a restrictive monetary policy framework by the Federal Reserve (Fed). This has boosted expectations that the Fed will announce rate cuts sooner rather than later.

Financial markets expect the Fed to cut its key borrowing rates by 50 basis points (bps) to 4.75%- 5.00% in the September meeting and reduce interest rates by more than 100 bps this year.

Meanwhile, higher bond yields and a decent recovery in the US Dollar (USD) have also weighed on the Silver price. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, climbs to near 103.00 after recovering from more than a six-month low near 102.15. 10-year US Treasury yields jump to near 3.84% Historically, higher yields on interest-bearing assets reduce the opportunity cost of non-yielding assets, such as Gold.

FXStreet