Silver price advances on US Dollar weakness, caution ahead of NFP report

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Silver (XAG/USD) extends its bullish momentum on Friday, trading around $80.85 at the time of writing, up 3.15% on the day.

Silver climbs on Friday, supported by broad US Dollar weakness ahead of the US employment report.
Markets remain cautious amid renewed tensions between the US and Iran despite the ceasefire remaining in place.
Traders await the April US NFP report for fresh clues on the Federal Reserve’s monetary policy outlook.

Silver (XAG/USD) extends its bullish momentum on Friday, trading around $80.85 at the time of writing, up 3.15% on the day. The white metal benefits from renewed weakness in the US Dollar (USD), while investors remain cautious amid geopolitical tensions in the Middle East and ahead of the United States (US) Nonfarm Payrolls (NFP) release.

The US Dollar loses ground despite the latest exchange of attacks between the US and Iran near the Strait of Hormuz. Iran accused Washington of targeting Oil vessels and civilian areas, while the US reported missile and drone attacks against its naval forces. However, US President Donald Trump attempted to reassure markets on Thursday, stating that the ceasefire agreement remains intact.

The softer USD environment is supporting demand for precious metals, including Silver, as a weaker Greenback makes dollar-denominated assets more attractive for international investors.

Market participants are now focused on the US April NFP report, scheduled for release later on Friday. Economists expect the US economy to have added 62K jobs in April, significantly below the previous 178K increase recorded in March, while the Unemployment Rate is expected to remain stable at 4.3%. Investors will also closely monitor wage growth figures, as the Average Hourly Earnings indicator is projected to rise by 3.8% YoY after 3.5% previously.

Silver FAQs

Why do people invest in Silver?

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.

Which factors influence Silver prices?

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.

How does industrial demand affect Silver 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.

How do Silver prices react to Gold’s moves?

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.