Silver prices fall below $30 per ounce.

Báo Công thương•20/12/2024

At the close of trading yesterday, silver prices extended their decline for a third consecutive session, falling more than 4% to $29.41 per ounce.

According to the Vietnam Commodity Exchange (MXV), red dominated the global commodity price chart yesterday (December 19). Notably, the metals group faced strong selling pressure, with all 10 commodities weakening simultaneously. Silver prices plummeted by more than 4%, falling below $30 per ounce for the first time since mid-September. In a similar trend, the energy price index also recorded a decline. At closing, the MXV-Index fell 1.04% to 2,179 points.

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MXV-Index

Metals market plunges due to macroeconomic pressures.

At the close of trading yesterday, the metals group continued to face strong selling pressure due to increasing macroeconomic pressures. For precious metals, silver extended its decline for the third consecutive session, falling more than 4% to $29.41 per ounce. This was also the first time silver prices had fallen below $30 per ounce since mid-September. Platinum prices also fell more than 1% to $923.5 per ounce. Precious metal prices continued to be pressured by a strengthening US dollar and concerns about a slower pace of interest rate cuts.

Metal price list

The US dollar surged after the Federal Reserve (FED) indicated a more hawkish stance on future interest rate cuts. In its interest rate decision released early yesterday morning, the FED revised down its forecast for next year's rate cuts to 50 basis points, equivalent to two 25-basis-point cuts, bringing the target rate to 3.75-4%. This cut is less than half the 100-basis-point reduction announced at the September meeting. By the end of 2026, the policy interest rate will be further reduced by 50 basis points to 3.4%, higher than the previous forecast of 2.75-3%. Furthermore, the inflation forecast for 2025 has risen to 2.5%, higher than the previous estimate of 2.1% and significantly higher than the FED's target of 2%.

This more hawkish stance from the Fed has fueled a sharp rise in the US dollar. Furthermore, the dollar's strength was further reinforced after the US revised its Q3 GDP data upward yesterday. Specifically, according to official figures released by the Bureau of Economic Analysis of the US Department of Commerce, the country's Q3 GDP increased by 3.1% compared to the previous quarter, 0.3 percentage points higher than the preliminary figures.

Accordingly, the US dollar continued to strengthen. After reaching a two-year high in the previous session, the Dollar Index rose another 0.35% yesterday, reaching 108.41 points. The strengthening US dollar increases investment costs, while the risk of slower interest rate cuts has caused the prices of precious metals, which are sensitive to interest rates and currency fluctuations, to continue to fall sharply.

For base metals, the strengthening US dollar also put pressure on commodities in the group, causing prices across the board to weaken. Most notably, LME zinc prices fell nearly 1% to $2,967 per ton, the lowest level in a month. Besides the strengthening US dollar, prices of this commodity are also under pressure amid concerns about declining demand from the manufacturing and construction sectors in China, the world's largest consumer.

Crude oil prices continue to slide slightly.

MXV reported that selling pressure also dominated the energy market yesterday. Except for natural gas, all other commodities closed in the red. Crude oil prices, in particular, continued to fluctuate throughout the session and closed down nearly 1%. Pessimism following the Fed's December policy meeting remains the main factor putting pressure on oil prices.

Energy price list

At the close of yesterday's trading session, WTI crude oil prices fell 0.95% to $69.91 per barrel, while Brent crude oil prices fell 0.69% to $72.88 per barrel.

Following the Fed's interest rate decision, the US dollar surged to a two-year high, making oil more expensive for buyers holding other currencies and pushing oil prices down. Concerns about the outlook for economic growth and global crude oil demand in 2025 continue to weigh on the market, after the Fed warned it would scale back interest rate cuts next year due to the potential return of inflation.

Conversely, better-than-expected US economic data released yesterday had a bullish impact on prices. Third-quarter GDP growth was unexpectedly revised upward to 3.1%, stronger than expectations of no change at 2.8%. In addition, initial jobless claims fell by 22,000 last week compared to the previous week, lower than market expectations. Furthermore, leading November indices unexpectedly rose 0.3% month-on-month, compared to expectations of a 0.1% decline, marking the largest increase in nearly three years. Finally, November existing home sales increased 4.8% from October to an eight-month high of $4.15 million, compared to expectations of a 3.2% increase to $4.09 million.

The fact that China's oil consumption still has room to grow also contributed to supporting oil prices yesterday. State-owned refiner Sinopec forecasts that China's oil consumption is expected to peak in 2027 at 16 million barrels per day.

Prices of some other goods