Silver on Track prices rose on Friday after a two-day hiatus, positioning the metal for its largest monthly profit since 2020. This surge is driven by strong retail demand and slower US 10-year treasury yields
as investors eagerly await critical US personal spending data to gauge future monetary policy directions.
Market Performance
Silver Price Movement
Silver prices increased by 0.45% to $31.32 an ounce, with a session low of $30.78. This follows a 2.5% loss on Thursday, marking the second consecutive day of profit-taking from 12-year highs.
Monthly Trades
In May, silver prices have surged by 19%, on track for their most significant monthly gain since 2020. The metal reached a 12-year peak on May 20 at $32.52
buoyed by the weaker dollar and falling US treasury yields after disappointing inflation and growth data.
Factors Influencing Silver’s Rise
Retail Demand
Retailers are increasingly viewing silver as an undervalued asset
particularly in the face of changing global central bank policies towards more accommodative stances. This demand surge highlights silver’s perceived hidden value
especially when compared to gold, which hit a record high of $2,450 an ounce on April 20. In contrast, silver’s record high of $49.78, set in April 2011, seems distant, prompting renewed interest in its potential.
Historical Value Comparison
Historically, silver has exhibited more volatile and aggressive price movements compared to gold. Recent times have an exception, but the current retail focus on silver underscores a recognition of its missing value.
US Treasury Yields and Rates
US Treasury Yields
United States 10-year treasury yields fell by 0.3%, moving away from four-week highs of 4.638%. This decline supports non-yielding assets like silver and gold.
US Interest Rates
Market odds for a 0.25% Federal Reserve rate cut in September stand at 51%
with a 64% probability of a similar cut in November. According to the Fedwatch tool, investors now anticipate a single Fed interest rate cut in 2024.
Upcoming Data
US Personal Spending Data
Investors are closely watching the upcoming US personal spending data
a key metric for the Federal Reserve in assessing inflation trends and shaping monetary policy. This data will provide crucial insights into the likely path of future interest rates and economic conditions.
Conclusion
Silver is experiencing a robust upward trajectory, driven by strong retail demand and favorable economic indicators. As it nears its highest monthly profit since 2020
the metal’s undervalued status compared to gold and supportive macroeconomic factors suggest continued bullish momentum.
FAQs
Why is silver rising towards its largest monthly profit since 2020? Silver rising due to strong retail demand, a weaker dollar, and declining US treasury yields
making it an attractive undervalued asset.
How does retail demand impact silver prices? Increased retail demand boosts silver prices as more investors seek it as a safe-haven asset
particularly in times of economic uncertainty or policy changes.
What role do US treasury yields play in silver prices? Declining US treasury yields make non-yielding assets like silver more attractive
driving up their prices.
What is the current outlook for US interest rates? Market expectations indicate a 51% chance of a 0.25% Fed rate cut in September and a 64% chance in November
with a single rate cut anticipated in 2024.
Why is US personal spending data important for silver prices? US personal spending data is crucial for the Federal Reserve to assess inflation and economic conditions
which in turn influences interest rate decisions and market sentiment towards precious metals like Silver on Track.