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Japanese Finance Minister Katsunobu Kato: I havent heard of any new economic stimulus plan.Japanese Finance Minister Katsunobu Kato: (When asked about the new economic package) We will analyze the economic situation and take necessary measures.Japanese Finance Minister Katsunobu Kato: We will continue to pay attention to inflation and the impact of US tariff policies on corporate profits.Japanese Finance Minister Katsunobu Kato: U.S. tariffs will affect corporate profits, especially in the automotive industry.Futures News, September 2nd: Based on the current macroeconomic environment and industry dynamics, the precious metals market is expected to remain volatile in the short term. Market expectations for a September Federal Reserve rate cut continue to rise, but the cautious signals sent by Powell at Jackson Hole suggest a gradual path for rate cuts. This discrepancy between expectations and reality is putting pressure on the US dollar and limiting the upside potential for gold and silver. Geopolitically, signs of negotiations between Russia and Ukraine have weakened safe-haven demand, but uncertainty surrounding the Trump administrations trade policy remains supportive. Industrial demand is showing diverging trends: silver has shown relative resilience, supported by a recovery in the automotive industry and demand from the new energy sector, with Comex silver seeing significant gains this week. Gold, on the other hand, is more constrained by fluctuations in US Treasury yields and shifting risk appetite. In the short term, investors should focus on this weeks non-farm payroll data for further guidance on Fed policy expectations. Precious metals are expected to remain volatile at high levels, with silver potentially outperforming gold due to its industrial properties.

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

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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.