Silver Price Forecast: XAG/USD remains below $29.50 due to improved US Dollar, yields

• Silver price depreciates as US Dollar improves due to higher yields.
• The non-yielding Silver may rebound as recent US inflation data raised the expectations of the Fed reducing rates in 2024.
• Demand uncertainties in China, the largest consumer of Silver, might add to the pressure on prices.

Silver price (XAG/USD) halts its three-day winning streak, hovering around $29.30 per troy ounce during the European trading hours on Tuesday. The price of Silver faces the challenge of an improved US Dollar (USD), which could be attributed to the higher UST yields. Traders await Tuesday’s speech by Federal Reserve Chairman Jerome Powell to assess the monetary policy outlook.

The price of the grey metal may regain its ground as the recent US inflation data raised the expectations of the Federal Reserve (Fed) reducing interest rates in 2024. Lower interest rates could spark the demand of non-yielding assets like Silver.

On Friday, the US Bureau of Economic Analysis reported that recent US inflation eased to its lowest annual rate in over three years. The US Personal Consumption Expenditures (PCE) Price Index increased by 2.6% year-over-year in May, down from 2.7% in April. Meanwhile, Core PCE inflation rose by 2.6% year-over-year in May, down from 2.8% in April.

However, Federal Reserve Bank of San Francisco President Mary Daly remarked on Friday, "If inflation stays sticky or comes down slowly, rates would need to be higher for longer," according to Reuters.

Demand uncertainties in China might contribute to the pressure on Silver prices after an official report indicated a second consecutive month of manufacturing downturn in June. China's National Bureau of Statistics (NBS) reported that the Manufacturing PMI remained at 49.5.