- The price of silver gains land as demanding as a safe refuge improves due to uncertainty for tariffs.
- The Trump administration would probably establish a “a little more than 10%” tariff for those smaller countries.
- The June US inflation data revived concerns about the high prolonged interest rates of the Fed.
The price of silver (XAG/USD) gains ground after registering losses in the two previous sessions, quoting around $ 37,80 per Troy ounce during Wednesday’s Asian hours. Silver demand as a safe refuge grows in the midst of uncertainty for tariffs.
The president of the USA, Donald Trump, notified 25 countries on the new tariff rates that will enter into force on August 1, including the main commercial partners Canada, Mexico and the European Union (EU). In addition, Trump said Tuesday night that the letters notifying the smallest countries, including the countries of Africa and the Caribbean, on their US tariff rates they would be sent soon, according to Reuters. Trump added that his administration would probably establish a “a little more than 10%” tariff for those countries.
Silver, which does not earn interest, can face challenges since the US inflation report for June revived concerns about high prolonged interest rates of the Federal Reserve (Fed). The US Consumer Price (CPI) raised 2.7% year -on -year in June, coinciding with market expectations. The underlying IPC stood at 2.9%, just below the 3.0% forecast but still significantly above the 2% target of the Federal Reserve. The operators will probably observe the next US Production Price Index (IPP).
La Plata, called in dollars, can also have difficulties as the US dollar (USD) continues to receive support from a cautious tone around the FED policy prospects, driven by the highest US CPI figures. It is important to note that a stronger USD reduces the demand for silver, since it is expected for buyers with foreign currency. The dollar index (DXY), which measures the value of the US dollar compared to six main currencies, remains around 98.50 at the time of writing.
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.
