Forex News
- Gold trades on the defensive on Tuesday as a stronger US Dollar and hotter-than-expected US inflation data weigh on the precious metal.
- US inflation accelerated in April, reinforcing expectations that the Federal Reserve could keep interest rates higher for longer.
- Technically, XAU/USD remains capped below the 100-day SMA, with RSI and ATR signaling subdued momentum and moderating volatility.
Gold (XAU/USD) extends its slide on Tuesday, retracing the previous day’s gains as hotter-than-expected US inflation data boosts US Treasury yields and the US Dollar (USD). At the time of writing, XAU/USD is trading around $4,665, down nearly 1.50% after hitting a three-week high of $4,773 during the Asian session.
US consumer inflation accelerated in April, largely driven by higher energy prices as Oil remained elevated amid disruptions around the Strait of Hormuz. Data released by the Bureau of Labor Statistics showed the headline Consumer Price Index (CPI) rose 0.6% MoM in April after increasing 0.9% in March, matching market expectations, while annual inflation accelerated to 3.8% from 3.3% previously, above forecasts of 3.7%.
Meanwhile, core CPI, which excludes volatile food and energy prices, rose 0.4% on a monthly basis, up from 0.2% in March and above expectations of 0.3%. On an annual basis, core inflation climbed to 2.8% from 2.6%, also exceeding forecasts of 2.7%.
The stronger-than-expected inflation data reinforced expectations that the Federal Reserve (Fed) may keep interest rates higher for longer or even consider rate hikes, pushing US Treasury yields higher. A higher interest rate environment reduces the appeal of non-yielding assets like Gold because the precious metal does not offer any yield or interest.
According to the CME FedWatch Tool, traders currently expect the Fed to keep interest rates unchanged for the remainder of the year. However, markets still price in a modest chance of a rate hike at the December meeting, with the probability standing near 36%.
US-Iran negotiations remain at an impasse over Iran’s nuclear program. US President Donald Trump told reporters in the Oval Office on Monday that the ceasefire is “on massive life support.” The remarks came after Trump rejected Iran’s latest response to the US-backed peace proposal, calling it “totally unacceptable.”
Reports also suggest that the US President is considering a resumption of military operations, alongside a potential restart of “Project Freedom” in the Strait of Hormuz. Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf warned that Tehran is prepared to respond to “any aggression,” adding that their move would leave the US “surprised.”
Technical analysis: XAU/USD struggles below 100-day SMA
On the daily chart, XAU/USD holds a constructive bias as it remains well above the 200-day Simple Moving Average (SMA) around $4,327 while still capped by the 100-day SMA near $4,785. This configuration suggests the broader uptrend remains intact, though the latest pullback keeps the metal trading below its shorter-term trend gauge.
The Relative Strength Index (RSI) at 48.02 sits just below the midline, hinting at a consolidative tone rather than outright bearish momentum, while the Average True Range (ATR) near $116.29 points to contained but still elevated daily volatility.
On the downside, initial support is seen at the horizontal floor around $4,500, with the longer-term 200-day SMA near $4,328 reinforcing a deeper demand zone if selling pressure resumes.
On the topside, resistance is first aligned at the 100-day SMA near $4,785, ahead of the more prominent horizontal barrier around $4,850. A sustained break above this cluster would be needed to revive bullish continuation, whereas a failure to clear it would keep XAU/USD confined to its current range.
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
- US inflation accelerates to 3.8% in April, above market expectations, supporting the US Dollar.
- Markets scale back Fed rate cut expectations following the stronger CPI report.
- The Japanese Yen remains supported by intervention risks and BoJ rate hike expectations.
USD/JPY trades around 157.65 on Tuesday at the time of writing, up 0.30% on the day. The pair benefits from renewed strength in the US Dollar (USD) after stronger-than-expected inflation data from the United States (US), while the Japanese Yen (JPY) limits gains amid persistent intervention concerns from Japanese authorities.
The Bureau of Labor Statistics (BLS) reported that inflation, as measured by the Consumer Price Index (CPI), accelerated to 3.8% YoY in April from 3.3% previously, above market expectations of 3.7%. On a monthly basis, the CPI rose 0.6%, in line with forecasts. Core inflation, which excludes volatile food and energy prices, increased to 2.8% YoY from 2.6% previously, also exceeding the 2.7% consensus.
The report also noted that energy prices rose 3.8% in April, accounting for more than 40% of the monthly increase in the overall index. Shelter and food costs also continued to rise, reinforcing concerns about persistent inflationary pressures in the US.
Meanwhile, weekly ADP data showed that US private employers added an average of 33K jobs per week over the four weeks ending April 25, signaling a modest improvement in labor market momentum.
Following the release, the US Dollar Index (DXY) advances toward 98.30, while US Treasury yields move higher. Investors now assess that the Federal Reserve (Fed) may need to keep interest rates elevated for longer in order to contain inflationary pressures. According to the CME FedWatch tool, the chance of a rate hike by the December meeting increased to 29.6% after the CPI release, up from 21.5% in the previous day.
The US Dollar is also benefiting from safe-haven demand. Geopolitical tensions in the Middle East remain elevated after US President Donald Trump stated that the US-Iran ceasefire was “on massive life support,” reviving concerns over a possible resumption of military operations.
On the Japanese side, the JPY remains supported by intervention speculation. US Treasury Secretary Scott Bessent recently confirmed that the United States and Japan had taken certain joint actions to address excessive volatility in currency markets. Investors, therefore, remain cautious about the risk of another intervention should USD/JPY approach the 160.00 area again.
Expectations of monetary tightening from the Bank of Japan (BoJ) are also supporting the Japanese currency. The Summary of Opinions from the central bank’s April meeting showed that some members believe another rate hike could come soon, while markets continue to price in an additional increase in Japanese interest rates in the coming months.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.48% | 0.74% | 0.30% | 0.32% | 0.37% | 0.38% | 0.51% | |
| EUR | -0.48% | 0.26% | -0.17% | -0.19% | -0.12% | -0.12% | 0.03% | |
| GBP | -0.74% | -0.26% | -0.45% | -0.45% | -0.38% | -0.38% | -0.23% | |
| JPY | -0.30% | 0.17% | 0.45% | -0.01% | 0.04% | 0.05% | 0.18% | |
| CAD | -0.32% | 0.19% | 0.45% | 0.01% | 0.05% | 0.06% | 0.18% | |
| AUD | -0.37% | 0.12% | 0.38% | -0.04% | -0.05% | 0.02% | 0.13% | |
| NZD | -0.38% | 0.12% | 0.38% | -0.05% | -0.06% | -0.02% | 0.12% | |
| CHF | -0.51% | -0.03% | 0.23% | -0.18% | -0.18% | -0.13% | -0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
- US Treasury Secretary Bessent backs Japan’s concerns over excessive exchange-rate volatility.
- German inflation rises, lifting bets on ECB rate hike.
- Traders price in a 92% chance of an ECB rate increase in June.
EUR/JPY falls by some 0.18% on Tuesday as the Japanese Yen (JPY) strengthens after US Treasury Secretary Scott Bessent said excess volatility in the FX markets is undesirable. At the time of writing, the cross-pair trades at 184.93 after peaking at around 185.46.
Yen gains as US-Japan officials warn against FX volatility
Bessent met with the Japanese Prime Minister Sanae Takaichi during his trip to Tokyo. He stated, “I believe the fundamentals of the Japanese economy are strong and resilient, and that will be reflected in the exchange rate.” His comments confirmed what the Japanese Finance Minister Satsuki Katayama said earlier, that she and Bessent reaffirmed close efforts to tackle exchange rate moves.
Inflationary pressures build in Europe; ECB expected to hike
Data in Europe revealed that Germany’s Harmonized Index of Consumer Prices (HICP) rose by 2.9% YoY in April, as expected. Other data showed that economic sentiment in Germany improved in the ZEW Survey of Economic Sentiment from May, rising to -10.2, up from -17.2 and exceeding forecasts of -19.8.
Meanwhile, money markets had begun to price in European Central Bank (ECB) rate hikes due to high energy prices sparked by the US-Iran conflict. Data from Prime Terminal revealed a 92% chance for a 25 basis points increase at the ECB’s June 11 meeting, with traders seeing the ECB’s Deposit Rate ending the year at 2.75%.
ECB’s Joachim Nagel said that if inflation expectations de-anchor, “we will see in June” the chance of a rate hike. ECB’s Patsalides was dovish, saying that there are scenarios in which the ECB wouldn’t need to raise rates.
EUR/JPY Price Forecast: Technical outlook
In the daily chart, EUR/JPY trades at 184.93. The cross holds above the clustered support formed by the simple moving average (SMA) bundle around 184.80 and the two upward-sloping trend-line break levels at 184.19 and 183.85, which together suggest the broader uptrend remains intact despite recent consolidation. The Relative Strength Index (14) sits near 48, hinting at neutral momentum and pointing to a market that is pausing rather than reversing while price stays supported by this underlying structure.
On the downside, immediate support is seen at the SMA cluster near 184.80, with the rising trend lines around 184.19 and 183.85 providing a deeper buffer if sellers press lower. As long as EUR/JPY holds above these levels, dips are likely to be viewed as corrective within the prevailing bullish structure, with the absence of nearby overhead resistance implying that a sustained break higher would open the way for further gains once momentum re-energizes.
(The technical analysis of this story was written with the help of an AI tool.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.48% | 0.72% | 0.28% | 0.32% | 0.38% | 0.38% | 0.51% | |
| EUR | -0.48% | 0.23% | -0.17% | -0.19% | -0.11% | -0.10% | 0.03% | |
| GBP | -0.72% | -0.23% | -0.43% | -0.43% | -0.35% | -0.34% | -0.21% | |
| JPY | -0.28% | 0.17% | 0.43% | -0.01% | 0.05% | 0.06% | 0.19% | |
| CAD | -0.32% | 0.19% | 0.43% | 0.01% | 0.07% | 0.07% | 0.19% | |
| AUD | -0.38% | 0.11% | 0.35% | -0.05% | -0.07% | 0.01% | 0.13% | |
| NZD | -0.38% | 0.10% | 0.34% | -0.06% | -0.07% | -0.01% | 0.13% | |
| CHF | -0.51% | -0.03% | 0.21% | -0.19% | -0.19% | -0.13% | -0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
MUFG’s Lee Hardman reports that the Pound (GBP) has weakened as UK political uncertainty intensifies after poor local election results for the government. EUR/GBP has risen and cable has fallen, with Gilts selling off modestly. He warns that a potential Labour leadership contest and any shift to the left could increase downside risks for GBP and Gilts.
Leadership uncertainty pressures Pound and Gilts
"The pound has weakened further at the start of this week reflecting building political uncertainty in the UK after last week’s disappointing local election results for the government. Pound weakness has extended overnight resulting in EUR/GBP rising up to 0.8675 and cable has fallen towards 1.3550."
"It has triggered a sell-off in the Gilt market where 10-year and 30-year yields both increased by around 15bps. So far the market moves have been relatively modest but are beginning to reflect building unease over the future of Prime Minister Keir Starmer who is facing growing pressure from within the Labour party to step down."
"It has been reported that 79 of Labour’s 403 MPs have now publicly called on the prime minister to step aside which is moving closer to the 81 MPs required to officially trigger a leadership contest. Prime Minister Starmer faces an important cabinet meeting today."
"A leadership contest whether immediate or more drawn out will add to political uncertainty in the near-term which is negative for the pound and gilts. The risk of a bigger sell-off will increase if Labour shift towards the left."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CAD climbs to its highest level since mid-April as hot US inflation data boosts the US Dollar.
- Traders raise bets that the Federal Reserve could keep borrowing costs elevated through year-end.
- Rising Oil prices linked to ongoing Middle East disruptions help limit downside pressure on the Canadian Dollar.
USD/CAD trades with a positive tone on Tuesday as a stronger US Dollar (USD) offsets support from elevated Oil prices for the Canadian Dollar (CAD). At the time of writing, the pair is trading around 1.3715, hovering near its highest level since April 16.
The Greenback extends its intraday advance after US inflation data came in hotter than expected. Data released by the Bureau of Labor Statistics showed the headline Consumer Price Index (CPI) rose 0.6% MoM in April after increasing 0.9% in March, in line with market expectations. On an annual basis, inflation accelerated to 3.8% from 3.3% previously, exceeding forecasts of 3.7%.
Meanwhile, core CPI, which excludes volatile food and energy prices, rose 0.4% MoM, up from 0.2% in March and above expectations of 0.3%. Annual core inflation climbed to 2.8% from 2.6%, also exceeding forecasts of 2.7%.
The data pushed US Treasury yields higher and lifted the US Dollar Index (DXY) toward 98.40 as traders increased bets that the Federal Reserve (Fed) could keep borrowing costs elevated through year-end. According to the CME FedWatch Tool, the probability of a rate hike at the September meeting currently stands near 13.5%, rising to around 32% for the December meeting.
At the same time, stalled US-Iran peace negotiations are providing additional support to the US Dollar, with no near-term resolution in sight. US President Donald Trump told reporters in the Oval Office on Monday that the ceasefire is “on massive life support."
However, gains in USD/CAD could be limited as rising crude Oil prices amid ongoing disruptions through the Strait of Hormuz provide underlying support for the commodity-linked Canadian Dollar.
Looking ahead, Canada’s economic calendar remains relatively light this week, leaving USD/CAD largely at the mercy of broader US Dollar and Oil price dynamics. Market attention is expected to remain squarely focused on developments surrounding the US-Iran negotiations.
In the United States, traders will also watch the Producer Price Index (PPI) data due on Wednesday, followed by Retail Sales figures on Thursday.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Commerzbank’s Thu Lan Nguyen notes Copper prices are trading close to January’s intraday record despite renewed Iran–US tensions and higher Oil prices. Markets currently anticipate limited economic fallout as long as a Hormuz reopening deal is reached, but prolonged disruption could hurt growth. Additional support comes from slower Chinese Copper ore imports and potential supply constraints linked to sulfuric acid shortages.
Tight ore supply and risk balance
"However, the recovery seen in recent weeks across a wide range of financial markets (such as the stock market) has shown that the market currently fears only limited economic repercussions from the ongoing crisis in the Middle East."
"This is the case only if US and Iran leaders reach an agreement in the foreseeable future that allows for the opening of the Strait of Hormuz. The longer the blockade lasts, however, the more severe the impact on the global economy is likely to be, meaning that the risk of setbacks should not be underestimated."
"Apart from the Iran conflict, there has recently been some news supporting prices, such as the Chinese trade data for April. These showed a slowdown in copper ore imports, which could indicate less dynamic copper production in the medium term in the most important producing country."
"A factor here could be that the blockade of the Strait of Hormuz is also limiting the supply of sulfuric acid, which is needed in copper ore mining. This, in turn, could exacerbate the shortage of copper ore."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
National Bank of Canada’s (NBC) Senior Economist Jocelyn Paquet, argues that surging AI-related investment is keeping U.S. GDP growth above potential, with forecasts of 2.4% in 2026 and 2.0% in 2027. However, Paquet warns this strength, combined with a dovish Federal Reserve (Fed) stance, risks delaying a return of inflation to the 2% target and is reshaping expectations for USD rates.
AI boom sustains growth and inflation
"Is this a problem? In the short term, the answer to this question is probably no. With hyperscalers projecting up to $800 billion in AI-related spending by 2026, growth in the sectors mentioned above is more likely to accelerate in the future rather than slow down, and economic data tends to confirm this hypothesis."
"These developments lead us to believe that the worst may be over for households and that consumption growth could accelerate as the year progresses. If our forecasts hold true, household resilience and continued growth in AI-related spending should allow GDP growth to remain above its potential in the coming quarters."
"The only problem with this scenario is that it may prove incompatible with a return of inflation toward the 2% target. Already in the first quarter, while consumer demand remained fairly weak, the core personal consumption expenditures (PCE) deflator rose at its fastest pace since the first quarter of 2023 (+4.3% on an annualized basis), pushing the 12-month rate to a two-year high of 3.1%."
"Could the resurgence of inflation jeopardize the expansion by prompting the Federal Reserve to adopt a more restrictive monetary policy? The upward shift in energy prices—not only in spot markets but also in futures markets—has certainly made the possibility of policy rate cuts this year much less likely, as evidenced by the OIS markets."
"Whether or not one agrees with the central bank’s current (and likely future) stance, monetary policy should nevertheless continue to stimulate the economy. This is partly why we forecast real GDP growth of 2.4% and 2.0%, respectively, in 2026 and 2027. But this combination of above-potential growth and lenient monetary policy will also, in our view, delay the return of inflation to target, particularly if the conflict in Iran were to drag on."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Austan Goolsbee, President of the Federal Reserve (Fed) Bank of Chicago, said that the April United States (US) Consumer Price Index (CPI) report was worse than they expected in comments reported by Reuters on Tuesday.
Key takeaways:
The April CPI report was worse than expected.
The worst part of April CPI is services inflation.
We have an inflation problem in this country.”
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.46% | 0.68% | 0.25% | 0.27% | 0.36% | 0.30% | 0.51% | |
| EUR | -0.46% | 0.21% | -0.17% | -0.22% | -0.11% | -0.18% | 0.05% | |
| GBP | -0.68% | -0.21% | -0.40% | -0.44% | -0.33% | -0.38% | -0.16% | |
| JPY | -0.25% | 0.17% | 0.40% | -0.02% | 0.07% | 0.03% | 0.23% | |
| CAD | -0.27% | 0.22% | 0.44% | 0.02% | 0.09% | 0.04% | 0.24% | |
| AUD | -0.36% | 0.11% | 0.33% | -0.07% | -0.09% | -0.04% | 0.16% | |
| NZD | -0.30% | 0.18% | 0.38% | -0.03% | -0.04% | 0.04% | 0.20% | |
| CHF | -0.51% | -0.05% | 0.16% | -0.23% | -0.24% | -0.16% | -0.20% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- Hotter-than-expected US inflation supports the US Dollar and weighs on Silver on Tuesday.
- Geopolitical concerns surrounding tensions between the US and Iran continue to support precious metals.
- Commerzbank and OCBC highlight support from industrial demand and persistent risks of high volatility in the Silver market.
Silver (XAG/USD) declines on Tuesday, stalling a four-day winning streak, trading around $84.10 at the time of writing, down 2.18% on the day. The pullback comes as the US Dollar (USD) benefits from renewed demand following stronger-than-expected US inflation data, which is also pushing US Treasury yields higher.
The Bureau of Labor Statistics (BLS) reported that inflation, as measured by the Consumer Price Index (CPI), accelerated to 3.8% YoY in April from 3.3% previously, above market expectations of 3.7%. On a monthly basis, the index rose 0.6%, in line with forecasts. Core inflation, which excludes food and energy prices, increased to 2.8% YoY from 2.6% previously, also exceeding expectations of 2.7%.
The BLS noted that “the index for energy rose 3.8 percent in April, accounting for over 40 percent of the monthly all items increase.” Shelter and food costs also increased, reinforcing concerns about persistent inflationary pressures in the United States (US).
Meanwhile, the ADP report showed that US private employers added an average of 33K jobs per week over the four weeks ending April 25, slightly above the previous reading, suggesting a modest improvement in labor market momentum.
Against this backdrop, the US Dollar Index (DXY) rises toward 98.30 following the release, as investors assess that the Federal Reserve (Fed) may keep interest rates higher for longer. A prolonged high-interest-rate environment generally reduces the appeal of non-yielding assets such as Silver.
The Greenback continues to benefit also from support linked to geopolitical tensions. Concerns surrounding the Middle East remain elevated after US President Donald Trump stated that the US-Iran ceasefire was “on life support.” According to CNN, several members of his administration are reportedly considering the possibility of resuming major military operations more seriously.
However, Commerzbank highlighted that Silver remains supported by the strength of industrial metals. The bank noted that the metal recently reached a two-month high near $87 per troy ounce, driven by gains in the London Metal Exchange index and concerns over potential production disruptions in Peru linked to an energy crisis.
Meanwhile, OCBC stated that the recent Silver rally has been driven by momentum, short-covering and expectations of a possible easing in trade tensions between the United States (US) and China. The bank also pointed out that the Silver Institute projects a sixth consecutive annual market deficit this year, reinforcing the narrative of structural supply tightness.
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.
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