Silver prices plunged nearly 2% on Tuesday, bringing the asset down to approximately $76 per ounce and marking a continuation of a three-week downward trend. The decline comes amid reduced liquidity in the markets due to holidays in China, Hong Kong, and other regions of Asia, leaving traders in a cautious stance.
Earlier in the year, silver had enjoyed a surge largely driven by speculative trading among Chinese investors, pushing prices to a staggering peak above $120 per ounce in late January. However, this exuberance was short-lived, leading to a swift downturn as market dynamics shifted. By early this month, silver had plummeted to around $64 per ounce, spurred by the unwinding of leveraged positions and investors liquidating their assets to offset losses accrued in other investments.
As the U.S. markets reopened, focus turned to the upcoming release of the Federal Reserve’s meeting minutes and the core Personal Consumption Expenditures (PCE) price index, which are expected to provide clearer guidance on the future of monetary policy. On the preceding Friday, silver had rebounded close to 3% following softer-than-anticipated inflation data from the U.S. This information has fueled speculation regarding potential interest rate cuts from the Fed, with market analysts anticipating a possible reduction as soon as July, and a significant likelihood of action in June as well.
The volatility in silver prices reflects broader market sentiments and monetary policy expectations as investors navigate the complex interplay of global economic conditions.
