- The price of silver can be seen amid the attractiveness of safe refuge after the announcement of US automotive tariffs.
- Silver, an asset without yield, could have attracted buyers in the middle of a weaker US dollar and treasure yields.
- Operators expect the Personal Consumer Expenses (PCE) report on Friday, the Fed preferred inflation indicator.
La Plata (XAG/USD) recovers the recent losses of the previous session, quoting around $ 33,70 per Troy ounce during Thursday’s Asian hours. Metal earns traction as investors seek safe refuge assets after the announcement of US automotive tariffs, which has fed concerns about possible reprisal measures next week.
The feeling of risk aversion intensified after the US president Donald Trump signed an orderly order on Wednesday, imposing a 25% tariff on cars imports, effective as of April 2, with charges starting the next day. However, imports from car parts will receive a postponement of a month.
In addition, the silver, an asset without performance, could have attracted buyers as the yields of the US Treasury decrease, with yields to 2 years and 10 years around 4.0% and 4.34%, respectively. In addition, an American dollar (USD) also also makes money more affordable for foreign buyers, further supporting the demand for gray metal.
Meanwhile, the Federal Reserve (Fed) reaffirmed its December projection of two rate cuts this year, but adopted a cautious posture. The president of the Fed of Minneapolis, Neel Kashkari, emphasized the continuous battle against inflation, stating: “The labor market has remained strong, but the biggest challenge is to finish the work”, repeating the opinion of President Powell that the cuts of fees are not imminent. Kashkari also highlighted political uncertainty as a complicating factor for Fed.
The operators are closely monitoring the next economic data of the US, including the initial weekly applications of unemployment subsidy and the final annualized report of the Gross Domestic Product (GDP) of the fourth quarter that will be published on Thursday. In addition, the publication of the Personal Consumer Expenses (PCE) report on Friday, the Fed’s favorite inflation indicator, will provide more information about the policy.
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.
