Silver prices surged to a weekly high of $29.20 after weak US NFP data sent US yields down. The report indicated a slowing labor market and softened wage growth, prompting investors to anticipate a shift in Fed policy towards normalization in September.
The decline in 10-year US Treasury yields to a multi-month low near 3.82% led to a drop in the US Dollar Index, boosting the appeal of non-yielding assets like Silver. The NFP report revealed a decrease in the number of individuals hired by employers in July, along with an increase in the Unemployment Rate to 4.3%. These factors suggest that the labor market is struggling to cope with higher interest rates.
Average Hourly Earnings also grew at a slower pace, signaling a slowdown in consumer spending and inflationary pressures. This could prompt the Fed to consider rate cuts sooner than expected. Silver prices broke above key resistance levels, indicating a positive trend in the near term.
Silver is a precious metal that investors often turn to for diversification, as a store of value, or as a hedge during high-inflation periods. It can be bought in physical form or traded through Exchange Traded Funds. The price of Silver can be influenced by factors such as geopolitical instability, interest rates, the US Dollar, industrial demand, and recycling rates.
The metal is widely used in various industries, particularly in electronics and solar energy, due to its high electric conductivity. Demand from major economies such as the US, China, and India can impact prices. Silver prices generally follow the movement of Gold, with the Gold/Silver ratio helping to determine the relative valuation between the two metals.
Investors may view a high ratio as a sign that Silver is undervalued or Gold is overvalued, while a low ratio could indicate the opposite. Understanding these dynamics can help investors make informed decisions when trading Silver. The recent surge in Silver prices following the weak US NFP data highlights the metal’s appeal as an investment option in times of economic uncertainty.
