Silver dropped to around $29 per ounce in mid-December, reaching its lowest point in three months, as the hawkish stance of the Federal Reserve and a bleak outlook for silver's industrial demand weighed on prices.
Silver prices drop to lowest in three months
The Federal Reserve's projection of fewer rate cuts in the coming year reflected concerns about persistently high underlying inflation and inflation risks tied to expansionary fiscal policies and potential tariffs under the incoming Trump administration. This heightened worries about weak demand for silver as an industrial material, causing the metal to underperform gold in the fourth quarter. In China, overcapacity in the solar panel industry led photovoltaic companies to join a government self-discipline program that could regulate supply, further dampening the outlook for silver demand.
Concerns on yuan devaluation
Additionally, concerns over a potential yuan devaluation, linked to China's more relaxed monetary policy, contributed to downward pressure on silver, as it lowered asking prices from the world’s leading exporter.
