Forex News
- EUR/USD rebounds from a three-month low as the US Dollar retreats from one-year highs.
- Renewed Fed rate-hike bets keep the Greenback supported despite easing geopolitical tensions.
- Hawkish ECB rhetoric and last week's 25 bps rate hike provide little support to the Euro.
EUR/USD stages a rebound on Friday as a pullback in the US Dollar (USD) helps the Euro (EUR) stabilize after recent losses. At the time of writing, the pair trades around 1.1470 after bouncing from a three-month low of 1.1417 touched earlier in the day.
The US Dollar Index (DXY) eases after Reuters reported that Israel and Hezbollah had agreed to a ceasefire, one of Iran's key demands under the 60-day MoU reached earlier this week.
The DXY, which tracks the Greenback's value against a basket of six major currencies, trades around 100.81 after touching 101.13 earlier in the day, its highest level since May 2025.
Despite easing geopolitical tensions, the US Dollar remains underpinned by renewed hawkish repricing of US interest rates, leaving EUR/USD on track to end the week in negative territory.
Earlier this week, the Federal Reserve (Fed) left its policy rate unchanged at 3.50%-3.75% but signaled that interest rate hikes remain on the table as policymakers seek to restore inflation to their 2% target following a recent pickup in price pressure driven by higher Oil prices.
Meanwhile, hawkish signals from the European Central Bank (ECB) following last week's 25 basis-point rate hike have failed to provide meaningful support to the Euro.
ECB policymaker Pierre Wunsch said on Friday that "if data is not going in the right direction, I would plead for a second hike in July." He added that "if we see higher services inflation, we may want to hike another 25 bps to be on the safe side," but noted that the ECB could cut rates "when the dynamics turn."
Analysts at Nordea said they see "limited upside for EUR/USD in the near term, as the ECB is likely closer to the end of its hiking cycle than the Fed and growth in the euro area continues to lag behind the US." They added that their "baseline is for EUR/USD to trade broadly sideways over the next few months, before gradually moving higher as US exceptionalism fades and the Fed eventually starts to cut rates ahead of the ECB."
Looking ahead, traders will focus on preliminary Purchasing Managers Index (PMI) data from both the Eurozone and the United States next week, along with the US Personal Consumption Expenditures (PCE) Price Index.
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.
- WTI and Brent have handed back nearly the entire conflict premium since the interim ceasefire.
- The selloff overlooks a physical market that remains acutely tight.
- US storage at the main delivery hub is near operational lows while refined-product margins stay elevated.
- The eventual supply glut is real, but it will arrive far more slowly than the curve now assumes.
The Crude Oil market has spent the week busily unwinding a war that has not actually been settled. West Texas Intermediate (WTI) has slid toward the mid-70s and Brent has slipped to just under 80, handing back almost the whole premium built since the Strait of Hormuz was throttled in late February. The trigger is an interim US-Iran ceasefire and the first tankers threading the waterway again; the tape has swallowed the story whole.
The awkward part is that the ceasefire is already fraying, with the first round of talks slipping from Friday into the middle of next week. More to the point, the physical market beneath the screen looks nothing like the clean, reopened supply chain that futures are busy pricing. On a longer horizon, the bears have it right that a glut is coming; they simply have the calendar badly wrong.
The real tightness has moved downstream
The selloff rests on a quiet assumption that cheaper Crude Oil means cheaper everything; that is exactly where it breaks down. The closure hit refined products, diesel, jet fuel and petrochemical feedstocks, far harder than it hit Crude Oil itself; those markets have stayed tight even as the benchmarks rolled over. Margins on middle distillates ran to multi-year highs through the spring; regional jet fuel margins spiked to levels that only appear when a buyer is genuinely short of supply.
Refining capacity does not answer to ceasefires
Even a sustained fall in Crude Oil would not loosen the part of the chain that is actually binding. Refining capacity is the constraint; a run of permanent plant closures has stripped out more than a million barrels a day of processing that no peace deal restores. The lighter grades pulled hardest by US shale are also relatively poor in the middle-distillate cuts that become diesel and jet fuel; more domestic Crude Oil therefore does little to refill the tightest products.
The delivery hub is running on fumes
Upstream, the picture is no looser. Commercial stockpiles at the main US delivery hub have drained for eight straight weeks to roughly 20 million barrels, near what traders treat as the operational floor. The broadest measure of US stocks now sits at levels last seen in the mid-1980s, the product of record exports as the country turned into the seller of last resort for a Gulf-starved market. That is the opposite of the well-stocked backdrop a falling price implies.
A reopened Strait is not a flowing one
The reopening itself is being treated as a switch when it behaves more like a slow dial. Clearing mines takes months rather than days; repositioning the tankers stranded in the Gulf takes weeks longer; restarting shut-in fields is slower still, since forced shutdowns can damage reservoir pressure and leave wells degraded. Consultants briefing the big producers have warned that flows may not reach pre-war levels until deep into next year. The market has front-run a recovery that cannot physically arrive on the schedule the price now assumes.
The glut is real, just not yet
None of this means the bears are wrong on direction. Once the waterway clears and Gulf barrels genuinely return, the structural setup turns heavy. Demand has already been hollowed out by the spring spike, with official forecasts now expecting global consumption to shrink this year; supply is set to outrun it as the shut-in barrels come back. The same forecasts pencil in inventories building briskly and the Brent price drifting toward the low-70s by the fourth quarter, with more downside in 2027. The honest read is a two-part curve: tight and underpriced now, oversupplied later.
Resistance: WTI meets its first cap close to 77.00, then the 200-day Exponential Moving Average (EMA) near 78.00 to 78.50 and the round 80.00 above that; Brent is pinned right at 80.00, with its own 200 EMA around 82.50 to 83.00 the heavier barrier.
Support: WTI leans on roughly 75.00, with a deeper shelf near 74.00 should the selling resume; Brent rests on about 78.00 to 78.50, with the next marker below sitting close to 76.00.
Bias: Tactically, fade the selloff. The physical squeeze and a daily Stochastic Relative Strength Index (Stoch RSI) buried near oversold argue the down-move is stretched, favouring a recovery toward the 200 EMA on both benchmarks while WTI holds the 74.00 to 75.00 shelf. Strategically, sell the rallies: as the supply ramp completes into 2027, the building glut should cap advances and bend the curve toward the low-70s and lower. The conviction call is a floor now and a ceiling later, not a one-way trip in either direction.
WTI daily chart
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Iran’s Foreign Ministry confirmed on Friday that a planned meeting in Switzerland with US officials had been postponed, adding that preparations are already underway for a new meeting in the coming days, Reuters reported. The ministry said that talks are on a final agreement, which would depend on the start and continued implementation of the specified terms included in a memorandum of understanding with the United States (US).
Iran also confirmed that the MOU with the US to end the war had been signed digitally, making Friday’s meeting in Switzerland no longer urgent. Late on Thursday, the White House announced that Vice President JD Vance delayed his trip to Switzerland to attend the talks, saying that the logistics had not been "simple or predictable."
For its part, the Swiss government said it remains ready to facilitate future discussions, while preparatory work for another meeting continues. The latest comments suggest that diplomatic efforts remain active, but Tehran wants the agreed terms to begin being implemented before moving toward a final agreement.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.10% | -0.16% | -0.13% | 0.27% | 0.00% | 0.30% | 0.37% | |
| EUR | 0.10% | -0.07% | 0.00% | 0.37% | 0.11% | 0.37% | 0.48% | |
| GBP | 0.16% | 0.07% | 0.06% | 0.43% | 0.19% | 0.46% | 0.55% | |
| JPY | 0.13% | 0.00% | -0.06% | 0.38% | 0.14% | 0.40% | 0.48% | |
| CAD | -0.27% | -0.37% | -0.43% | -0.38% | -0.22% | 0.02% | 0.10% | |
| AUD | -0.00% | -0.11% | -0.19% | -0.14% | 0.22% | 0.26% | 0.39% | |
| NZD | -0.30% | -0.37% | -0.46% | -0.40% | -0.02% | -0.26% | 0.08% | |
| CHF | -0.37% | -0.48% | -0.55% | -0.48% | -0.10% | -0.39% | -0.08% |
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).
Nordea’s research suggests EUR/USD upside is constrained in coming months by interest rate differentials and relative growth. The European Central Bank is seen closer to the end of its hiking cycle than the Federal Reserve, while Eurozone data remain softer than US figures. Nordea still projects a modest EUR/USD recovery over the longer term as US exceptionalism fades.
Rate gap and growth weigh on Euro
"We see limited upside for EUR/USD in the near term, as the ECB is likely closer to the end of its hiking cycle than the Fed and growth in the euro area continues to lag behind the US."
"Our baseline is for EUR/USD to trade broadly sideways over the next few months, before gradually moving higher as US exceptionalism fades and the Fed eventually starts to cut rates ahead of the ECB."
"A break below recent lows in EUR/USD would open for a move towards the 1.03–1.05 area, while a sustained move above 1.10 would likely require a clear shift in relative data surprises in favour of the euro area or a dovish repricing of the Fed."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold heads for a third straight weekly loss as higher-for-longer Fed expectations weigh on sentiment.
- Traders price in a 70% chance of a September Fed rate hike following this week's hawkish FOMC meeting.
- Technically, XAU/USD remains below the Bollinger SMA middle band, while the RSI points to sustained bearish momentum.
Gold (XAU/USD) remains under pressure on Friday as traders assess the latest news about the US-Iran peace deal and the Federal Reserve's (Fed) hawkish monetary policy announcement. At the time of writing, XAU/USD trades around $4,150 after hitting a one-week low of $4,121 earlier in the day.
A modest pullback in the US Dollar (USD) is keeping downside contained, but the metal remains on track for its third straight weekly loss. Gold is down nearly 25% from its all-time high after the US-Iran war led traders to price out Fed rate-cut bets for this year, while the Fed's hawkish tilt further reinforced expectations that interest rates would remain higher for longer.
Traders now see a 70% chance that the US central bank could raise rates as soon as September, according to the CME FedWatch Tool. The shift toward tighter monetary policy comes after nearly half of FOMC members signaled at least one rate increase by year-end at the June meeting this week.
As a non-yielding asset, Gold tends to struggle in a high-interest-rate environment, as investors favor yield-bearing assets such as bonds.
The increasingly hawkish stance reflects a deteriorating inflation outlook, driven in part by the recent surge in Oil prices, which pushed annual inflation to 4.2% in May, well above the Fed's 2% target. Newly appointed Fed Chair Kevin Warsh reiterated that the central bank remains committed to bringing inflation back down to 2%.
Weak physical demand is adding to Gold's woes. According to sources cited by Indian media outlets, Gold imports into India, one of the world's largest bullion consumers, have fallen nearly 70% since the government raised import duties to 15% from 6% last month. However, Gold's longer-term outlook remains underpinned by steady central bank buying.
On the geopolitical front, the 60-day Memorandum of Understanding (MoU) between the United States and Iran has improved market sentiment.
The White House said US Vice President JD Vance had delayed a planned trip to Switzerland, where he was expected to lead a new round of talks with Iran. Iran's Foreign Ministry later said the MoU had already been signed digitally, making Friday's meeting in Switzerland no longer urgent. Meanwhile, Reuters reported Israel and Hezbollah agreed to a ceasefire, according to a senior US official.
Technical analysis: XAU/USD remains under pressure below the Bollinger mid-band
On the daily chart, XAU/USD extends its corrective slide below the Bollinger Simple Moving Average (SMA) middle band at $4,357. The metal holds closer to the lower half of the Bollinger envelope, while the Relative Strength Index (RSI) around 35 leans toward bearish momentum, and the Average Directional Index (ADX) in the mid‑30s suggests a strengthening downtrend bias.
On the topside, initial resistance emerges at the Bollinger SMA middle band near $4,356, with the upper Bollinger band coming in higher around $4,636 as a more distant cap if a rebound accelerates. On the downside, immediate support is seen near the recent base around $4,150, followed by the lower Bollinger band near $4,077, where sellers could hesitate before considering a deeper extension of the current pullback.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Nordea expects USD/JPY to remain high as wide US–Japan yield differentials persist and the Bank of Japan stays very accommodative. While some gradual BoJ normalization is anticipated, it is seen as too modest to materially weaken the Japanese Yen near term. Nordea highlights intervention risk if USD/JPY rises excessively but does not base its forecast on it.
Wide rate gap underpins Japanese Yen weakness
"We expect USD/JPY to stay elevated as long as the Fed maintains its hawkish stance and US yields remain well above Japanese yields, while the BoJ only normalises policy very gradually."
"Even if the BoJ were to tweak its yield curve control framework further, we doubt that such steps would be sufficient on their own to trigger a sustained and significant strengthening of the JPY against the USD in the near term."
"Japanese authorities may step up verbal or even actual FX intervention if USD/JPY were to rise too quickly or move significantly above recent highs, but we do not base our central forecast on repeated large-scale interventions."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Deutsche Bank’s Galina Pozdnyakova, Jim Reid and Luke Templeman highlight that next week’s main macro focus will be global flash PMIs and several key inflation releases. They note particular attention on the US May PCE report, alongside the Ifo survey in Germany, Tokyo CPI in Japan, and CPI reports in Canada and Australia.
Flash PMIs and global CPI releases
"The global flash PMIs will be amongst the main data highlights next week."
"In the US, the focus will also be on the May PCE report."
"Elsewhere, key releases include the Ifo survey in Germany, Tokyo CPI in Japan and CPI reports in Canada and Australia."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Nordea analysts expect the Dollar to stay supported in coming months as the Federal Reserve maintains a relatively hawkish stance and US data remain firm. They argue that US growth and inflation dynamics justify higher yields versus peers, limiting Dollar downside. However, they still see a gradual Dollar depreciation over the medium term as global growth broadens and other central banks catch up.
Fed policy and data back Dollar strength
"In FX, we see the USD supported in the near term by relatively strong US data and a hawkish Fed, but we still expect a gradual depreciation over the medium term as growth outside the US improves and other central banks continue their hiking cycles."
"We expect the Fed to keep rates higher for longer than markets currently price, which should keep US yields elevated and support the dollar against most major currencies in the coming quarters."
"Risks to our USD view are two-sided, as a sharper-than-expected slowdown in US activity could trigger earlier Fed cuts and weigh on the dollar, while a renewed inflation surge or further upside surprises in US data could extend the period of dollar strength."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- USD/CAD rises to its highest level since April 2025 as weak Canadian Retail Sales and lower Oil prices weigh on the Loonie.
- The Canadian Dollar faces another headwind from diverging Fed and BoC monetary policy outlooks.
- Markets price in a 70% chance of a Fed rate hike in September, according to CME FedWatch data.
USD/CAD trades on the front foot on Friday despite a modest pullback in the US Dollar (USD), as weaker-than-expected Canadian Retail Sales data weighs on the Canadian Dollar (CAD). At the time of writing, the pair trades around 1.4170, its highest level since April 2025.
Statistics Canada reported on Friday that Retail Sales rose 0.5% in April, down from a 0.9% increase in March and slightly below the 0.6% consensus forecast. Retail Sales excluding automobiles increased just 0.1%, missing forecasts of 0.7%, while March's reading was revised down to 1.2% from 1.4%.
The CAD is also facing pressure from diverging monetary policy outlooks between the Bank of Canada (BoC) and the Federal Reserve (Fed). At this week's policy meeting, the Fed reiterated its commitment to returning inflation to its 2% target, while nine of 19 policymakers projected at least one rate hike this year.
The hawkish tilt comes as higher Oil prices have pushed US inflation higher, with May Consumer Price Index (CPI) accelerating to 4.2%, its highest level since April 2023.
Following the meeting, markets priced in 70% chance of a September rate hike, according to CME FedWatch data, providing fresh support for the Greenback. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 100.81 after touching 101.13 earlier in the day, its highest level since May 2025.
By contrast, inflation pressures in Canada remain relatively contained. At last week's meeting, the Bank of Canada (BoC) said US tariffs argue for lower rates, although persistently high energy prices could justify "consecutive increases in the policy rate."
However, with Oil prices retreating following the US-Iran truce, the case for rate hikes has weakened. Lower crude prices are also adding pressure on the commodity-linked Loonie, given Canada's status as a major Oil exporter. West Texas Intermediate (WTI) Crude trades around $75.50 per barrel, its lowest level since March 5.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.09% | -0.05% | 0.23% | 0.01% | 0.33% | 0.37% | |
| EUR | 0.05% | -0.04% | 0.00% | 0.29% | 0.07% | 0.37% | 0.42% | |
| GBP | 0.09% | 0.04% | 0.04% | 0.32% | 0.13% | 0.43% | 0.47% | |
| JPY | 0.05% | 0.00% | -0.04% | 0.28% | 0.09% | 0.37% | 0.41% | |
| CAD | -0.23% | -0.29% | -0.32% | -0.28% | -0.17% | 0.09% | 0.13% | |
| AUD | -0.01% | -0.07% | -0.13% | -0.09% | 0.17% | 0.29% | 0.35% | |
| NZD | -0.33% | -0.37% | -0.43% | -0.37% | -0.09% | -0.29% | 0.03% | |
| CHF | -0.37% | -0.42% | -0.47% | -0.41% | -0.13% | -0.35% | -0.03% |
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 Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
- Silver posts a third consecutive daily decline and remains on track for a notable weekly loss.
- Markets continue to strengthen expectations for higher US interest rates following the Fed’s latest meeting.
- Optimism surrounding a ceasefire between Israel and Hezbollah limits demand for safe-haven assets.
Silver (XAG/USD) trades around $64.85 on Friday at the time of writing, down 1.31% on the day. The white metal remains under pressure for a third consecutive day as investors reassess the outlook for US monetary policy and developments in the Middle East.
Market sentiment continues to be influenced by the hawkish tone adopted by the Federal Reserve (Fed) this week. At its June meeting, the US central bank left interest rates unchanged but signaled that several policymakers still support an additional rate hike before year-end. This stance has led traders to reinforce expectations for higher interest rates for longer, reducing the appeal of non-yielding assets such as Silver.
According to the CME FedWatch tool, markets are now assigning a high chance to a rate hike in the coming months. Newly appointed Fed Chair Kevin Warsh also reiterated the central bank’s commitment to returning inflation to its 2% target, adding to expectations of a more restrictive monetary policy stance.
On the geopolitical front, the traditional safe-haven support for precious metals has weakened after Reuters reported that Israel and Hezbollah agreed to a ceasefire starting Friday afternoon. The development has helped improve risk appetite and reduced defensive demand for Silver.
Inflation concerns also remain in focus due to volatility in energy prices and risks surrounding global Oil supply. However, these factors have not been sufficient to offset the negative impact of expectations for tighter US monetary policy.
Silver, therefore, remains biased to the downside in the near term, with investors closely monitoring upcoming US economic data and any signals that could either confirm or challenge expectations of further Federal Reserve tightening.
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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