FX.co ★ Silver under sellers' pressure

There is little sign that the selling pressure in silver will let up anytime soon as the precious metal continues to decline. Silver continues to see significant selling pressure as prices remain below $19 an ounce, trading at a new 2.5-year low.According to analysts, silver is suffering as the US dollar continues its rally, trading at a new 20-year high. At the same time, the precious metal is also following industrial metals lower as recession fears continue to grow. Along with silver, copper prices have dropped below critical support at $3.50 a pound, falling to their lowest level since November 2020.

Silver is an important precious metal. However, 60% of demand comes from industrial uses.Market analysts point out that the factors putting pressure on silver are driven by the Federal Reserve's monetary policy stance. The US central bank continues to pursue aggressive rate hikes to bring down inflation. The Federal Reserve is leading global central banks in rate hikes, which is helping to support the US dollar. At the same time, the central bank's focus on inflation over growth is increasing concerns that it will push the economy into a recession.Currently, markets expect the Federal Reserve to raise the Fed Fund rate by another 75 basis points later this month.Growing recession fears can be seen in the bond market as breakeven levels, which measure the difference between nominal and real yields, continue to decline. On Tuesday, five-year forward breakeven rates fell to 2%, the lowest level since March 2021.According to silver-backed exchange-traded funds, analysts at Heraeus noted that silver investors have turned into outright sellers. The European company also noted that there had been a $1 billion outflow of silver from global ETFs since May.Commodity analysts at Commerzbank note that speculative positioning in the silver market also indicates that investors have given up on the precious metal.Although the silver market faces many challenges in the near term, there is still some optimism that markets can turn around. Commerzbank said that the market has taken into account a lot of bad news and the recent selling could be seen as a capitulation move.Commodity analysts at Blue Line Futures are also optimistic about silver's potential turnaround. The analysts said that they will be watching Wednesday's inflation data closely.There are growing expectations that the June Consumer Price Index will show consumer prices rising 9%. Analysts have said that higher inflation could cause investors to question the Federal Reserve's ability to bring down inflation.Blue Line Futures is looking for silver prices to hold support at the same level.