As stability improves, investors are turning away from safe havens, including silver, leading to further price declines.
The strength of the US dollar and inflationary pressures are weighing on silver
The US dollar moved higher after Wednesday’s release of strong inflation data. The personal consumption expenditure (PCE) price index, a key inflation measure, rose to 2.3% in October, up from 2.1% in September.
The core PCE, which excludes volatile food and energy prices, rose to 2.8%, up slightly from the previous month’s 2.7%.
These numbers, coupled with robust consumer spending, have prompted the Federal Reserve to take a cautious stance on rate cuts. The central bank’s hesitation strengthens the dollar, putting reverse pressure on silver prices.
Fed minutes indicate continued vigilance
The minutes of the Federal Reserve’s November meeting show that there is a lot of focus on inflation and the resilience of the labor market. With inflation stable and the labor market strong, the Fed is unlikely to cut rates anytime soon.
This cautious policy stance boosts the dollar and reduces demand for non-yielding assets like silver.