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EU High Representative for Foreign Affairs and Security Policy Karas: Iran cannot be allowed to charge countries passage fees.JPMorgan Chase: The base case is that the disruption to cross-strait shipping will eventually be resolved, and oil prices are expected to remain high in the second quarter (above $100 per barrel) and fall in the second half of 2026.JPMorgan Chase: The near-term risk is that oil prices could be pushed to the $120-$130 per barrel range.European Central Bank (ECB) Governing Council member Villeroy said on Thursday that the ECBs next move is likely to be an interest rate hike as the Middle East conflict continues, but it is too early to determine when such a hike will be necessary. The ECB kept its key interest rate unchanged at 2% last month, but outlined several ways the conflicts development could affect the eurozones economic outlook. In an adverse scenario, disruptions to oil and gas transport via the Strait of Hormuz would continue until the end of the second quarter, keeping energy prices high. In this scenario, ECB economists predict average inflation this year will reach 3.5%, well above its 2% target. Villeroy said, "A prolonged conflict is clearly a negative factor. We are closer to a moderately adverse scenario than the baseline scenario. The ECB must remain vigilant as there are signs that inflation expectations are rising."The Russian Foreign Ministry announced on April 2 that Foreign Minister Sergey Lavrov and Saudi Foreign Minister Faisal held a telephone conversation that day, expressing serious concern over the continued deterioration of the military and political situation in the Persian Gulf region. Both sides emphasized the urgent need to end the military confrontation, which has resulted in civilian casualties and severe damage to civilian infrastructure, including to countries not directly involved in the conflict. They affirmed the need to intensify political and diplomatic efforts to peacefully resolve the Middle East crisis, based on international law and taking into account the legitimate interests of all countries in the region. Against this backdrop, both sides reiterated their firm commitment to maintaining close diplomatic policy coordination between Russia and Saudi Arabia, particularly within the framework of the United Nations.

Forecast for Silver Price: XAG/USD to fall to $25.00 as supply concerns subside and risk aversion increases

Daniel Rogers

Apr 20, 2023 13:46

 截屏2022-06-06 下午5.54.42.png

 

During the early hours of Thursday, the price of silver (XAG / USD) falls to $25.20, a new intraday low. In doing so, the precious metal records its first daily loss in three days, as concerns of a supply crisis subside and a risk-averse mood prevails.

 

Wednesday, Reuters cited the Silver Institute's annual prognosis report, which stated that global silver demand increased by 18% to a record high of 1.24 billion ounces last year, resulting in a massive supply deficit. According to the report, "The Silver market was undersupplied by 237.7 million ounces in 2022, the institute said in its most recent World Silver Survey, calling this 'possibly the largest deficit on record'."

 

On the other hand, higher inflation indicators from the United Kingdom, the Eurozone, and the United States, along with hawkish comments from the Bank of England (BoE), European Central Bank (ECB), and Federal Reserve (Fed), increase the likelihood of rate increases and dampen investor sentiment. John Williams, president of the Federal Reserve Bank of New York, is one of the Fed's most recent policy advocates. In May, he voiced support for an interest rate hike of 0.25 percentage points and said, "We will use monetary policy tools to restore price stability." Before him, the president of the Federal Reserve Bank of Chicago, Austan Goolsbee, highlighted the strength of the credit market as one of the most important catalysts to monitor prior to the next Fed monetary policy meeting.

 

With this, market participants increase their wagers on the central bank's 0.25 percentage point rate hike in May to at least 85 percent and reduce the likelihood of a rate cut in 2023.

 

It should be noted that the UK's allegations of China's hidden motive to clamp down on Western infrastructure and the US House China Committee's discussion on the Taiwan invasion scenario rekindle the West vs. China conflict narrative and impact on sentiment. On the same line are the concerns surrounding the probable drag on the US debt ceiling decision as a result of US President Joe Biden's reluctance to raise debt limits.

 

In addition, Reuters reported that US consumers are falling behind on their credit card and loan payments as the economy weakens, which also puts pressure on the XAG/USD exchange rate.

 

In this context, S&P 500 Futures have recorded their first daily loss in four days, falling 0.25 percent intraday to 4,168 as of press time. However, the US 10-year and 2-year Treasury bond yields hover around 3.60 percent and 4.25 percent, respectively, after reaching new monthly highs the day before. The US Dollar Index (DXY) fluctuates around 102.000 after rectifying its adverse bias from the previous day.

 

Considering the future, the recent emphasis on qualitative news highlights them as the most important risk indicator. Nonetheless, the US Weekly Initial Jobless Claims, Philadelphia Fed Manufacturing Survey, and Existing Home Sales should be monitored for fresh impulses.


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