FX.co ★ Silver Retreats on Dollar Strength

Silver prices dipped below the $45 per ounce mark on Friday, retreating from its 14-year peak as the U.S. dollar gained strength, buoyed by positive U.S. economic data that scaled back expectations for significant Federal Reserve rate cuts. Recent reports showed a decline in weekly jobless claims to 218,000, underscoring the labor market's resilience, while second-quarter GDP growth was revised upwards dramatically to an annualized rate of 3.8%, marking the fastest increase in nearly two years. The markets continue to anticipate a quarter-point rate cut from the Federal Reserve in October; however, the forecasted rate easing for the year has been reduced to 39 basis points from approximately 43 earlier this week. Despite this decline, silver remains about 4% up this week, driven by strong industrial demand, particularly from sectors like photovoltaic panels and electronics where resource substitution is limited. On the supply side, silver production faces constraints in its ability to respond swiftly to price increases. Additionally, disruptions at smelting and processing facilities in crucial refining areas have tightened the availability of refined silver, reduced the immediacy of deliveries, and increased short-term premiums.