Silver Surges on China Growth, Fed Minutes to Shape Outlook (01.08.2025)

Global markets fluctuate as economic data and central bank policies shape trends.

EUR/USD rose to 1.0350, yen weakened near intervention levels, and gold held steady at $2,640 under dollar strength. Silver rallied to $30.10 on Chinese growth optimism, while GBP/USD stayed pressured by diverging monetary policies. Traders eye US labor data and FOMC Minutes for insights.

EUR/USD Gains Ground, but Fed Minutes Loom

The EUR/USD pair has strengthened to around 1.0350 in the early European session on Wednesday. However, the pair’s potential for further upside may be limited by expectations of slower interest rate cuts by the Fed in 2025. Federal Open Market Committee (FOMC) Minutes later today will reveal more clues.

The US Services Purchasing Managers Index (PMI) rose to 54.1 in December, up from 52.1 in the previous month and exceeding the market consensus of 53.3. Additionally, the number of Job Openings in the US surged to 8.09 million in November, surpassing both the previous month’s reading of 7.83 million and the market expectation of 7.7 million.

Hawkish remarks from Fed officials have reinforced the outlook for tighter policy. Atlanta Fed President Bostic stated that inflation is expected to gradually decline to the Fed’s 2% target, but policymakers must be cautious due to uneven progress in tackling inflation. He suggested that keeping interest rates high may be necessary to maintain price stability. Earlier in the week, Fed Governor Lisa Cook emphasized that rate cuts should be approached with caution, given the strong labor market and persistent inflation pressures.

The ECB is expected to reduce rates by 25 basis points at its next meeting on January 30, with traders forecasting more than 100 basis points of cuts throughout the year. Today, German Retail Sales, Eurozone Consumer Confidence, and the Producer Price Index (PPI) will be released. Strong results could provide support for the euro.

From a technical perspective, the first resistance level is at 1.0460, with further resistance levels at 1.0515 and 1.0575 if the price breaks above. On the downside, the initial support is at 1.0335, followed by additional support levels at 1.0270 and 1.0220. 

Yen Hovers Around Intervention Levels

The Japanese yen weakened to around 158.2 against the US dollar on Wednesday, hovering near its lowest level in over five months and approaching the 160-per-dollar mark, a level that triggered intervention by authorities six months ago. Earlier this week, Finance Minister Katsunobu Kato reiterated his warning against speculative, one-sided moves in the currency market, signaling the government's readiness to intervene if excessive volatility continues.

The yen has been under pressure as uncertainty grows regarding the timing of interest rate hikes by the Bank of Japan. BoJ Governor Kazuo Ueda stressed that any adjustments to policy would depend on economic, price, and financial conditions, with a particular focus on achieving sustainable wage growth. The central bank also emphasized the need for caution in light of both domestic and global uncertainties.

The key resistance level appears to be 158.30, with a break above it potentially targeting 160.00 and 161.00. On the downside, 154.90 is the first major support, followed by 153.40 and 152.40 if the price moves lower. 

Gold Struggles as US Dollar Strengthens

Gold prices held steady around $2,640 per ounce on Wednesday, pressured by a stronger US dollar and rising Treasury yields. This came after a rise in US job openings, signaling strength in the labor market. Additionally, the latest ISM services report revealed a pickup in activity and an increase in prices, raising concerns about ongoing inflation and lowering expectations for substantial rate cuts by the Federal Reserve. As gold typically benefits from lower interest rates, this further weighed on its price.

The precious metal did find some support on Tuesday due to uncertainty surrounding tariff policies ahead of Trump’s inauguration, and the People’s Bank of China added gold to its reserves for the second month in a row, according to official data. Traders are now focused on upcoming US jobs data, including the nonfarm payrolls report, and the latest FOMC minutes for additional policy insights.

Technically, the first resistance level will be 2665 level. In case of this level’s breach, the next levels to watch would be 2695 and 2725 consequently. On the downside 2630 will be the first support level. 2620 and 2600 are the next levels to monitor if the first support level is breached. 

Monetary Policy Divergence Keeps GBP/USD Under Pressure

The GBP/USD has been under pressure, with sterling falling to $1.2470. The US dollar strengthened due to strong US economic data, including rising job openings and robust services sector activity. This has raised expectations that the Federal Reserve may delay or reduce its rate cuts, supporting the dollar. Meanwhile, concerns over the UK’s economic outlook and inflationary pressures continue to weigh on the pound. With the US labor data due Friday, any positive numbers could further strengthen the dollar. The divergence in monetary policies between the US and the UK is likely to keep the GBP/USD under pressure. If the dollar maintains its strength, further declines in GBP/USD could follow.

The first resistance level for the pair will be 1.2570. In case of this level's breach, the next levels to watch would be 1.2600 and 1.2650. On the downside 1.2480 will be the first support level. 1.2350 and 1.2300 are the next levels to monitor if the first support level is breached.

Silver Extends Rally on China Growth Hopes

Silver prices extended their five-day rally, trading near $30.10 per troy ounce during Wednesday’s Asian session. The metal is gaining momentum with uncertainty over tariff policies ahead of Donald Trump’s inauguration. Trump recently denied a Washington Post report claiming his team might narrow the scope of proposed tariffs to focus on key imports.

Meanwhile, strong economic signals from China, the largest silver consumer, are boosting demand. The People’s Bank of China is working with the State Planner to stimulate growth. PBoC official Peng Lifeng announced plans to support banks in expanding loans under a trade-in initiative to bolster the economy.

However, silver prices face pressure from a stronger US dollar, which makes the metal more expensive for foreign buyers. The US Dollar Index remains above 108.50, supported by a surge in the 10-year US Treasury yield to 4.68%. This reflects shifting expectations for Federal Reserve interest rate policies following strong US economic data, including a strong ISM services report suggesting persistent inflation.

Higher interest rates weigh on silver as a non-yielding asset. Traders now await US labor data, including the Nonfarm Payroll (NFP) report and FOMC Minutes, for further policy cues.

On the technical front, resistance is at $30.20, with further levels at $30.70 and $31.00 if breached. Support lies at $29.85, with $28.50 and $28.00 as additional levels if the first support is broken.