Silver Prices rose in European trade on Friday, marking the third consecutive day of gains and scaling a three-week high. This upward momentum is driven by a combination of factors, including the decline in US 10-year treasury yields and the prospect of increased demand from China. As silver approaches three-year highs, the white metal is poised for its largest weekly profit since early April.
Silver Prices Reach Three-Week Highs
Silver prices climbed 1.5% to $28.77 an ounce, the highest since April 19, with a session-low at $28.23. This rise follows a 3.7% increase on Thursday, the second straight day of profit and the largest since early April. Silver had previously hit a three-year high at $29.80 an ounce before experiencing a short-term correction, indicating strong investment demand and positive market sentiment.
Weekly Trades and Silver’s Largest Profit
Silver prices are up 8% so far this week, indicating a strong recovery after a recent downturn. This is the first weekly profit for silver in three weeks and the largest since early April. The white metal’s robust performance underscores the improving investment demand and the role of declining US treasury yields in driving silver prices higher.
US Yields and Their Impact on Silver
US 10-year treasury yields fell 0.3% on Friday, marking the second straight session of declines and reaching four-week lows at 4.420%. The tapering of treasury yields contributes to the upward trend for silver
as lower yields reduce the opportunity cost of holding precious metals. This decline in yields often indicates a shift in market sentiment, providing support for silver prices.
US Interest Rate Expectations
The impact of US unemployment data on the odds of Fed interest rate cuts plays a significant role in shaping market expectations. The latest data showing a slowing US labor sector has increased the odds of interest rate cuts in the coming months. According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June rose to 9%, while the odds for July increased to 21%
and the odds for September climbed to 70%. These changing expectations affect the broader market sentiment and the direction of silver prices.
Chinese Data and Its Influence
Chinese trade balance data revealed that imports and exports rose past estimates in April, indicating improving economic performance and actual demand. China, as a significant consumer of silver, plays a crucial role in driving investment demand for the white metal. The positive Chinese data suggests a stronger outlook for silver, contributing to its recent upward trend.
Conclusion
Silver’s rise to three-week highs is driven by a mix of factors
including the decline in US 10-year treasury yields, shifting US interest rate expectations
and the improving demand from China. The white metal’s robust performance, coupled with its largest weekly profit since early April
indicates a positive outlook for silver prices. As market participants continue to monitor US treasury yields and Chinese economic data, the trajectory of silver prices remains dynamic.
FAQs
Q1: Why are silver prices rising as US treasury yields fall? A1: Silver prices often rise when US treasury yields fall
as lower yields reduce the opportunity cost of holding precious metals. The decline in yields reflects a shift in market sentiment, providing support for silver prices.
Q2: What impact do US interest rate expectations have on silver prices? A2: US interest rate expectations play a crucial role in shaping market sentiment and the direction of silver price. If the odds of Fed interest rate cuts increase
it can lead to upward pressure on silver prices due to lower opportunity costs for holding the metal.
Q3: How does Chinese data influence silver price? A3: China is a significant consumer of silver, and its economic performance affects investment demand for the white metal. Positive Chinese trade balance data, indicating an increase in imports and exports, contributes to the upward trend in silver price.
Q4: What is the significance of silver’s largest weekly profit since early April? A4: The largest weekly profit for silver since early April reflects a strong recovery after a recent downturn. It indicates robust investment demand and a positive outlook for the white metal, driven by factors like declining US treasury yields and improving demand from China.
Q5: What is the outlook for silver price amid the recent trends in US yields and Chinese demand? A5: The outlook for silver price appears positive
given the decline in US treasury yields and the increasing demand from China. As market participants assess these trends and US interest rate expectations
the direction of silver prices will depend on a combination of factors driving the broader market sentiment.