Silver Price Surges Amidst Rising Middle-East Tensions
The silver price (XAG/USD) continues its upward trajectory, marking a five-day winning streak and currently trading at $34.10 during the Asian session on Monday. This surge in silver prices is attributed to the following key factors:
Geopolitical Tensions in the Middle East
- Israel conducted airstrikes on southern Beirut, targeting the offices of Hezbollah’s al-Qard al-Hassan financial institution.
- The US government initiated an investigation into the release of classified documents detailing Israel’s military preparations for a potential strike on Iran.
Monetary Policies of Major Central Banks
- The People’s Bank of China (PBoC) reduced the 1-year Loan Prime Rate (LPR) from 3.35% to 3.10% and the 5-year LPR from 3.85% to 3.60%.
- The European Central Bank (ECB) cut its interest rates by 25 basis points last week.
- The Bank of Canada (BoC) is expected to implement a significant interest rate cut of 50 basis points at its upcoming monetary policy meeting.
Furthermore, the Bank of England (BoE), the Reserve Bank of New Zealand (RBNZ), and the US Federal Reserve (Fed) are all contemplating potential rate cuts in the near future.
Impact of US Presidential Elections on Silver Demand
Market sentiment leans towards a positive outlook on Republican nominee Donald Trump winning the 2024 presidential election. Trump’s fiscal and trade policies are anticipated to be inflationary and supportive of the US Dollar (USD). A stronger USD could potentially dampen silver demand, as it makes silver more expensive for buyers using foreign currencies.
Silver FAQs
What is Silver’s Role in the Market?
Silver is a precious metal traded among investors for its value and as a potential hedge during inflationary periods. It can be purchased physically or traded through Exchange Traded Funds.
What Factors Influence Silver Prices?
Silver prices can be influenced by geopolitical instability, interest rates, USD performance, investment demand, mining supply, and industrial usage in sectors such as electronics and solar energy.
How Does Silver Relate to Gold?
Silver prices often follow Gold’s movements as both are considered safe-haven assets. The Gold/Silver ratio can indicate relative valuation between the two metals.
What Role Does Silver Play in Industry?
Silver is widely used in industries like electronics and solar energy due to its high electric conductivity. Demand from key economies like the US, China, and India can impact silver prices.