Silver Prices Retreat Ahead of US PCE Inflation Rate Release
Silver prices retreated on Tuesday, down 1.43% to $67.50 at the time of writing. The correction marks a second consecutive day for the precious metal as investors remain cautious ahead of the US Personal Consumption Expenditures (PCE) Price Index release on Wednesday.
The PCE inflation rate is expected to remain steady at 3.4% year-over-year in July, but a stronger-than-expected reading could fuel concerns over tighter monetary policy and weigh on Silver. On the other hand, easing inflation could strengthen expectations for a monetary policy hold and support precious metals.
The US Treasury plans to double its buyback operations for longer-dated bonds, which could affect market liquidity and bond yields while reviving the US Dollar (USD) debasement narrative against a backdrop of elevated public debt. Geopolitical tensions also provide potential support for precious metals, with Commerzbank noting that the expansion of US sanctions against Iran adds to geopolitical uncertainty.
Despite Tuesday's correction, Silver's industrial fundamentals remain supportive due to strong demand from the green-energy transition, particularly photovoltaic solar panel production and electric vehicles. This combination of industrial demand and safe-haven appeal could continue to underpin Silver.