- The price of silver collapses while the readjustment of the Fed policy adds pressure on precious metals.
- The fortress of the US dollar and the increase in returns weigh on the raw materials called in dollars.
- XAG/USD approaches the support of the trend line while the threat of a technical break is loom below $ 36.00.
The Alcistas de la Plata are suffering losses on Monday, since the strong US dollar and the increase in yields in the US reduce the demand for precious metals.
XAG/USD is falling towards the level of psychological support of 36.00 $ at the time of writing. Intradia losses for white metal are currently approaching 1.60%.
The fall in the price of silver has been mainly due to recovery in the value of the US dollar. Treasury yields and renewed hope in world commercial negotiations are prominent promoters of current price action.
Traders have also hosted the recent comments of President Donald Trump, who declared that trade negotiations with key business partners are “going well” before the deadline of tariffs on July 9.
This has encouraged investors to get away from safe refuge assets, such as silver and gold.
In addition, Germany published its May industrial production data, which showed an annual increase of 1% (compared to a 2.1% contraction in April). The monthly figure increased by 1.2%, while the markets had anticipated that it would remain unchanged.
Additionally, China’s currency reserves for June were at 3,317 billion dollars, slightly above the expectations of consensus, which supports a more stable macroeconomic background.
Next to that pressure to the south was the readjustment in the Federal Reserve monetary policy position (FED) in reaction to the best agricultural payroll data (NFP) of the USA published on Thursday.
These data points have reinforced the confidence of investors in global economic growth, reducing the demand for traditional secure refuge assets.
Technical Analysis of La Plata: XAG/USD collapses, focus at 36.00 $
Technically, La Plata is struggling to maintain the bullish impulse after falling from the 37.00 region, with the price action by going abruptly at the time of writing.
Daily La Plata graphics (XAG/USD)
The current candle in the daily chart suggests an increase in downward risk, particularly if there is a clear break of the psychological level of 36.00. This level is aligned with the support of the trend line of the ascending channel.
A break below this level could expose deeper support areas, including the Fibonacci extension level of 23.6% of the upward trend from April to June in 35.12 $. The single mobile average (SMA) is at $ 34.54, which could serve as another important level for bassists operating XAG/USD.
For the silver to recover, it is necessary to keep above the 20 -day SMA in 36.38 $, opening the door for the maximum intra -ease of Monday in 37.23 $.
SILVER – FREQUENT QUESTIONS
Silver is a highly negotiated precious metal among investors. Historically, it has been used as a value shelter and an exchange means. Although it is less popular than gold, operators can resort to silver to diversify their investment portfolio, for their intrinsic value or as a possible coverage during periods of high inflation. Investors can buy physical silver, in coins or bullion, or negotiate it through vehicles such as the funds quoted in the stock market, which follow their price in international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can cause the price of silver to shoot due to its safe refuge status, although to a lesser extent than that of gold. As an asset without performance, silver tends to climb with lower interest rates. Its movements also depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (XAG/USD). A strong dollar tends to maintain the price of silver at bay, while a weaker dollar probably drives rising prices. Other factors such as investment demand, mining – silver supply is much more abundant than gold – and recycling rates can also affect prices.
Silver is widely used in the industry, particularly in sectors such as electronics or solar energy, since it has one of the highest electrical conductivities of all metals, surpassing copper and gold. An increase in demand can increase prices, while a decrease tends to reduce them. The dynamics in US economies, China and India can also contribute to price fluctuations: for the US and particularly China, its large industrial sectors use silver in several processes; In India, the demand for consumers for precious metal for jewelry also plays a key role in pricing.
Silver prices tend to follow gold movements. When gold prices go up, silver typically follows the same path, since their status as shelter is similar. The gold/silver ratio, which shows the number of ounces of silver necessary to match the value of an ounce of gold, can help determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that silver is undervalued, or that gold is overvalued. On the contrary, a low ratio could suggest that gold is undervalued in relation to silver.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
