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- Silver trades above $70.00, supported by a weaker US Dollar and lower Oil prices.
- Markets await the Fed's monetary policy decision on Wednesday, as well as further details on the US-Iran agreement.
- Expectations of future monetary hold continue to support the appeal of precious metals.
Silver (XAG/USD) advances on Tuesday and trades around $70.45 at the time of writing, up 0.60% on the day. The white metal extends its rebound as investors adjust positions ahead of the Federal Reserve's (Fed) monetary policy decision due on Wednesday.
Market attention also remains focused on diplomatic developments between the United States (US) and Iran. US President Donald Trump said that the text of the agreement will be released in the coming days and that the Strait of Hormuz should be fully reopened by Friday. At the same time, Hezbollah officials stated they had received assurances from Tehran that no final nuclear agreement would be signed without an Israeli withdrawal from Lebanon.
The relative improvement in the geopolitical environment is reducing part of the demand for safe-haven assets. However, the impact on precious metals remains limited, as investors prefer to wait for further details before making broader adjustments to their positions.
The decline in Oil prices is also supporting market sentiment. Easing energy costs could help reduce global inflationary pressures, providing central banks with greater room to consider the monetary status quo in the coming months.
Meanwhile, the US Dollar (USD) remains under pressure. The latest employment data showed that US private employers added an average of 25.5K jobs per week over the four weeks ending May 30, down from 29K previously. This slowdown in hiring fuels expectations of a less dynamic labor market and limits support for the Greenback.
The weakness of the US Dollar mechanically enhances Silver's attractiveness for investors holding other currencies. Traders will now focus on the Federal Reserve (Fed) statement and updated economic projections for clues on the future path of interest rates. Like Gold (XAU/USD), Silver generally benefits from a lower interest rate environment due to its non-yielding nature. Any indication that the Fed will probably not hike its rate this year could therefore continue to support the precious metal's price in the coming weeks.
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.












