Silver price is currently trading sideways around $31.00 as investors await the US Inflation report for June. Federal Reserve Chair Jerome Powell indicated that the labor market strength appears to be easing. The silver price has also managed to hold the Falling Channel breakout, despite Powell’s commentary suggesting risks to the Fed’s dual mandate are finely balanced. The continued strength in market expectations for the Fed to begin reducing interest rates from September has impacted silver’s price movement.
The US Dollar has remained under pressure ahead of the US Consumer Price Index report for June, which will be published soon. The US Dollar Index, which tracks the Greenback’s value against six major currencies, has gained ground, although it remains above a four-week low. Additionally, 10-year US Treasury yields are consolidating around 4.30%. Silver’s technical analysis shows an extension to the upside near $31.00 after the breakout of the Falling Channel formation on a four-hour timeframe. The bullish trend is further supported by the upward-sloping 20-day Exponential Moving Average and the 14-period Relative Strength Index shifting into the bullish range.
Investors often turn to Silver to diversify their investment portfolios, for its intrinsic value or as a potential hedge during high-inflation periods. Silver, historically used as a store of value and a medium of exchange, can be purchased physically in coins or bars or traded through Exchange Traded Funds. Silver prices are influenced by various factors such as geopolitical instability, US Dollar behavior, investment demand, mining supply, and recycling rates. Its high electric conductivity makes it widely used in the electronics and solar energy sectors, impacting prices based on demand fluctuations.
Silver prices tend to follow Gold’s movements, as they both serve as safe-haven assets. The Gold/Silver ratio can help determine the relative valuation between the two metals, with some investors viewing a high ratio as an indicator that Silver is undervalued or Gold is overvalued. On the other hand, a low ratio might suggest that Gold is undervalued relative to Silver. Factors such as dynamics in the US, Chinese, and Indian economies also contribute to price swings, as these countries have significant industrial and consumer demand for Silver. Despite being less popular than Gold, Silver remains a valuable and versatile asset for investors looking to diversify their portfolios or hedge against inflation.
