Silver Price Update: What You Need to Know
Current Market Situation
- Silver price remains under pressure near $30.35 in Friday’s early European session.
- Trump trades are likely to support the Greenback and undermine the USD-denominated Silver price.
- Global silver demand in 2024 could help limit the XAG/USD’s losses.
Silver price (XAG/USD) trades in negative territory around $30.35 on Friday during the early European session. The white metal remains vulnerable amid the stronger US Dollar (USD). Traders await the release of the US October Retail Sales report on Friday for fresh impetus. The Fedspeak will be closely monitored as it might offer some hints about the US interest rate outlook.
Factors Affecting Silver Price
Donald Trump’s victory in last week’s US presidential election sparked expectations of potentially inflationary tariffs and other measures by his incoming administration, boosting the Greenback. Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD against a basket of six currencies, currently trades near 106.80 after hitting a fresh year-to-date high near 107.05 in the previous session. The 10-year US Treasury bond hit the highest since the start of July at 4.48%. The renewed USD demand could undermine the USD-denominated Silver as it makes the white metal more expensive in other currencies, dampening demand.
China’s National People’s Congress (NPC) meeting last week failed to deliver the immediate fiscal stimulus that investors were expecting. The concerns about sluggish demand could weigh on the Silver price as China is the world’s major importer of silver.
On the other hand, record-high industrial demand for silver might support the white metal in the near term. According to the Silver Institute and consultancy Metals Focus, demand for silver across industrial applications is expected to increase 7% YoY in 2024, reaching 700 million ounces (Moz). Additionally, analysts expect the global silver market to show a physical deficit of around 182 million ounces in 2024, marking the fourth consecutive year of shortfall.
Silver FAQs
What You Need to Know About Silver
- Silver is a precious metal highly traded among investors, historically used as a store of value and a medium of exchange.
- Silver prices can move due to factors such as geopolitical instability, interest rates, USD behavior, investment demand, mining supply, and more.
- Silver is widely used in industry, particularly in sectors like electronics and solar energy, with dynamics in economies like the US, China, and India affecting prices.
- Silver prices tend to follow Gold’s moves, with the Gold/Silver ratio helping determine relative valuation between the two metals.
Analysis
The current silver market is facing pressures from the strengthening US Dollar and uncertainties surrounding global economic conditions. Factors such as Trump’s policies, Chinese demand, and industrial usage are influencing the price of silver in both the short and long term.
Investors should pay attention to the upcoming US Retail Sales report and Fedspeak for potential market movements. The projected increase in global silver demand in 2024 could provide some support for silver prices amidst the current challenges.
Understanding the dynamics of the silver market and the factors affecting its price is crucial for investors looking to diversify their portfolios or hedge against inflation. Keeping an eye on geopolitical events, industrial demand, and the behavior of other key economies can help investors make informed decisions regarding silver investments.