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Silver nosedives to $29 as China offers sluggish fiscal boost

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Silver plummeted to near $29.00 in Friday’s American trading. The white metal faces an intense sell-off as the outcome of China’s third plenum meeting had less stimulus measures to address economic challenges and was more focusing more on “high-quality development”.

The world’s second-largest economy struggles to maintain the economic growth momentum due to poor demand from domestic and the overseas market. Therefore, investors were expecting big bold fiscal measures China’s Communist Party to uplift growth prospects.

Absence of strong fiscal measures to boost industrial output has weighed on the XAG price. Silver, as a metal, has application in various sectors such as Electric Vehicles, medical appliances and consumer durables.

Meanwhile, a sharp recovery in the US Dollar due to growing speculation for Donald Trump’s victory in upcoming presidential elections has also weighed on the Silver price.

The Dollar Index DXY, which tracks the Greenback’s value against six major currencies, advanced to near 104.30 after recovering from an almost four-month low of 103.65. Improved appeal of the US Dollar makes the Silver price an expensive bet for investors.

However, the Federal Reserve is widely anticipated to start reducing interest rates from the September meeting. The expectations rose by cooling inflationary pressures and easing labor market strength.

XAGUSD by TradingView

(Source: OANDA)