XAG/USD remains below $29.00 despite rising geopolitical tensions

VaselineAugust 19, 2024

0 3 minutes read

XAG/USD remains below .00 despite rising geopolitical tensions

Silver price downside could be limited due to rising geopolitical tensions.
Hamas rejected the terms of a hostage release and ceasefire deal discussed in Doha on Thursday and Friday.
Ukraine initiated Russia’s largest invasion since World War II.

The price of silver (XAG/USD) has minor losses, trading around $29.00 per troy ounce during the Asian session on Monday. However, Silver-haven’s downside could be limited due to rising geopolitical tensions.

On Sunday, conflicting statements by Hamas and Israel dimmed the chances of a ceasefire agreement. Hamas issued a statement rejecting the terms of a hostage release and ceasefire deal discussed in Doha on Thursday and Friday. The group accuses Prime Minister Benjamin Netanyahu of introducing new obstacles to the negotiations, according to Reuters, citing a local Times of Israel news agency.

Israeli Prime Minister Benjamin Netanyahu is scheduled to host US Secretary of State Antony Blinken on Monday. After their meeting, Blinken will travel to Cairo, where negotiations for an agreement continue. The US said it plans to host a second meeting later in the week and aims to finalize the deal by the end of the week.

In addition, concerns about escalating tensions between Ukraine and Russia have been heightened since Ukraine launched the largest invasion of Russia since World War II. The ministry released a video in which General Valery Gerasimov, the commander of Russian military operations, visits another battle zone in Ukraine. Gerasimov received reports from commanders and set “tasks for further action,” according to Reuters.

Non-yielding silver prices could rise further due to the likelihood of an interest rate cut by the Federal Reserve (Fed) starting with the September hikes. Last week’s US economic data indicated that retail sales beat expectations, while both the Producer Price Index (PPI) and the Consumer Price Index (CPI) suggested inflation was easing.

Federal Reserve Bank of San Francisco President Mary Daly stressed on Sunday that the US central bank should take a gradual approach to reducing borrowing costs, according to the Financial Times. In addition, Federal Reserve Bank of Chicago President Austan Goolsbee warned that central bank officials should be cautious about keeping policy tight longer than necessary.

Frequently asked questions about silver

Silver is a highly traded precious metal among investors. It has historically been used as a store of value and medium of exchange. Although less popular than gold, traders can turn to silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during periods of high inflation. Investors can buy physical silver, in coins or bullion, 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 cause the price of silver to escalate due to its safe-haven status, although to a lesser extent than gold. As a non-yielding asset, silver tends to rise with lower interest rates. Its movements also depend on how the US dollar (USD) behaves, as the asset is valued in dollars (XAG/USD). A strong dollar tends to keep silver prices at bay, while a weaker dollar is likely to propel prices higher. 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, especially in sectors such as electronics or solar energy, because it has one of the highest electrical conductivity of all metals – more than copper and gold. An increase in demand can raise prices, while a decrease tends to lower them. Dynamics in the US, Chinese and Indian economies may also contribute to price fluctuations: for the US and especially China, their large industrial sectors use silver in various processes; in India, consumer demand for the precious metal for jewelry also plays a key role in pricing.

Silver prices tend to follow the movements of gold. When gold prices rise, silver usually follows suit, as their safe haven asset status is similar. The gold/silver ratio, which shows the number of ounces of silver needed to equal the value of one ounce of gold, can help 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. Conversely, a low ratio could suggest that gold is undervalued relative to silver.

VaselineAugust 19, 2024

0 3 minutes read

Frequently asked questions about silver

Vaseline

Related Articles

Child tax credit 2024: eligibility requirements, repayment amount and more

Cadence Design Systems, Inc. (NASDAQ:CDNS) Short Interest Update

Weekly US initial jobless claims rise to 225,000 from 220,000 expected

GE HealthCare: The Picture of Multiple Benefits Is Very Real (NASDAQ:GEHC)