- Silver price attracts sellers as recent US data reinforces the odds of nominal rate cuts by the Fed.
- The US Dollar receives support as Treasury yields continue to gain ground.
- The downside of the Silver could be restrained due to political uncertainty around the US presidential election.
Silver price (XAG/USD) is under pressure as the US Dollar (USD) and Treasury yields continue to rally, driven by recent robust US economic data released on Friday. Silver price hovers around $33.50 per troy ounce during Monday’s European trading hours.
The dollar-denominated Silver faces challenges due to solid US Dollar (USD) amid higher Treasury yields. A higher US Dollar makes Silver expensive for buyers with foreign currency. The US Dollar Index (DXY), which measures the USD against six major currencies, trading near 104.30. Meanwhile, yields on 2-year and 10-year US Treasury bonds are at 4.12% and 4.28%, respectively.
Friday's data release showed the US Michigan Consumer Sentiment Index rose to 70.5 in October from 68.9, beating forecasts of 69.0. Additionally, Durable Goods Orders declined by 0.8% month-over-month in September, a smaller drop than the expected 1.0%.
Political uncertainty around the US presidential election may lend some support to Silver. In the past three weeks, allies of former President Donald Trump faced at least 10 legal setbacks in key battleground states, which could influence the November 5 race between Trump and his Democratic opponent, Vice President Kamala Harris.
The safe-haven appeal of Silver may be limited, however, by easing geopolitical tensions. Following Israel's airstrikes on Iranian missile and air defense sites early Saturday, which were less aggressive than expected, Iran has downplayed the impact. Supreme Leader Ayatollah Ali Khamenei remarked that the incident "should neither be downplayed nor exaggerated."
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0800 as mood improves
EUR/USD preserves its recovery momentum and trades in positive territory above 1.0800 on Monday. In the absence of high-tier data releases, the improving risk mood makes it difficult for the US Dollar to find demand and helps the pair edge higher.
GBP/USD rises toward 1.3000 on renewed USD weakness
GBP/USD holds its ground and advances to the 1.3000 area in the second half of the day on Monday. Following the previous week's rally, the US Dollar struggles to find demand as the risk mood improves on Monday, allowing the pair to stretch higher.
Gold price remains on the defensive below $2,748-2,750 hurdle amid positive risk tone
Gold price struggles to capitalize on its intraday bounce and remains below the $2,748-2,750 supply zone through the early part of the European session on Monday. Safe-haven demand stemming from Middle East tensions and US election jitters continues to act as a tailwind for the precious metal.
Metaplanet stock jumps after announcing $10.5 million Bitcoin purchase
Japanese investment firm Metaplanet Inc. said on Monday that it had expanded its Bitcoin holdings by around 156 BTC, worth around $10.5 million. With the latest purchase, the Tokyo-listed firm has more than doubled its Bitcoin holdings in Q3, holding 1,018 BTC valued at around $69 million.
US elections: The race to the White House tightens
Trump closes in on Harris’s lead in the polls. Neck and neck race spurs market jitters. Outcome still hinges on battleground states.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.