- Falls in the price of silver help to take benefits and the settlement of positions to compensate losses in other places.
- Silver, sure shelter, loses flows after reports that suggest a relief of US aggression towards Iran.
- The Popular Bank of China announced that it will keep its preferential rates of unchanged loans on Friday.
The price of silver (XAG/USD) extends its losses per third consecutive session, quoting around $ 35,80 during the first European hours on Friday. The price of precious metal is depreciated as operators take benefits and liquidate positions to compensate losses in other assets.
In addition, precious metals, including silver, attract vendors due to the decrease in the demand for safe refuge, driven by reports that suggest relief in US rhetoric towards Iran. The absence of negative developments in the front of the Iran-Israel conflict so far this Friday, improves the feeling of the market and revives the appetite for the risk.
The president of the USA, Donald Trump, supposedly said he will offer Iran a final opportunity to negotiate the end of his nuclear program. Trump pointed out Thursday that he would delay his final decision on the launch of attacks for up to two weeks.
La Plata, which does not generate interests, could have had difficulties since the president of the Federal Reserve (Fed), Jerome Powell, warned that continuous political uncertainty will keep the Fed in a position of maintaining the fees. Higher interest rates tend to support high yields, attracting investors in search of better returns.
At a press conference after the meeting on Wednesday, Powell also pointed out that inflation remains something above the objective and could increase in the future. He stressed the importance of the current political position that leaves the Central Bank in a good position. The Fed announced that it would maintain the interest rate without changes in 4.5% in June, as expected widely.
In addition, the Popular Bank of China (PBOC) decided to maintain its preferential loan rates (LPR) without changes on Friday. The LPR at one year and five years stood at 3.00% and 3.50%, respectively. The price of gray metal faces challenges due to the highest cost of indebtedness in China, one of the largest manufacturing centers in the world of electronics, solar panels and automotive components, the country’s industrial demand per silver is significant.
FAQS SILVER
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.
