- The price of silver fights despite the renewed concerns about the independence of the US Federal Reserve.
- President Trump could announce his favorite candidate to lead the Federal Reserve next year.
- Iran’s Foreign Minister Abbas Araghchi refused to resume nuclear negotiations with the United States.
The price of silver (xag/usd) drops slightly after registering profits in the two previous sessions, quoting around $ 36.50 per Troy ounce during Friday’s Asian hours. The fall in precious metals prices, including silver, could be contained due to renewed concerns about the independence of the Federal Reserve of the US (Fed).
The president of the United States, Donald Trump, described, in the Hague on the margin of the NATO summit, to the president of the Federal Reserve, Jerome Powell, of “terrible” and shared that he has several potential successors in mind. “I know that between three or four people I am going to choose from.” Trump could weaken Powell’s authority by announcing his favorite candidate to lead the Central Bank next year, either in September or October.
In addition, operators can adopt precautions due to the potential of a weakening of the feeling of the market, promoted by the recent comments of Iranian Foreign Minister, Abbas Araghchi. Araghchi said Tehran has no intention of resuming nuclear negotiations with the United States. “No agreement or arrangement has been made to resume negotiations. No promise has been given, nor has any discussion on this matter has been carried out,” he added according to CNN.
The US gross internal product (GDP) showed a 0.5% contraction in the first quarter, which was worse than the previous estimate and market expectation of -0.2%. Disappointing GDP data further support the DOVISH expectations of the FED; However, this was compensated by the fall in unemployment applications to a minimum of five weeks in 236k and the orders of durable goods that registered an increase of 16.4%, the highest gain in 11 years. The markets now wait for the PCE inflation report later for the Fed future address.
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.
