Silver Prices Rise Above $30.50 as Dollar Weakens and Geopolitical Concerns Grow

Team FS

    18/Nov/2024

  • Silver prices climbed above $30.50 as the dollar faced profit-taking.
  • Investors await comments from Fed officials on future rate cuts and monetary policy.
  • Geopolitical tensions, including Biden's approval for Ukraine to strike Russia, boosted safe-haven demand.
  • Silver prices saw a strong rebound on Monday, climbing back above the $30.50 per ounce mark. This recovery came after the precious metal hit a two-month low earlier, driven by a pause in the dollar rally. The dollar had previously surged on expectations of fewer Federal Reserve rate cuts and optimism surrounding the US economy under the incoming Trump administration. However, as the dollar rally stalled, investors took profits, which provided a favorable backdrop for silver prices to rebound.

    Market participants are closely monitoring comments from Federal Reserve officials, who are expected to offer further guidance on the US interest rate path. With concerns over inflation and economic growth, investors are looking for signs of potential rate hikes or monetary policy changes. These remarks could significantly impact the outlook for the dollar and, by extension, precious metals like silver.

    In addition to the Fed outlook, the China's Loan Prime Rate (LPR) decision is in focus. There is growing hope that Chinese authorities will implement additional stimulus measures to support economic growth. If these measures are introduced, it could increase demand for silver, as silver is widely used in industrial applications, especially in technology and manufacturing sectors.

    Meanwhile, geopolitical tensions are escalating, which has contributed to increased demand for safe-haven assets such as silver. In particular, the recent authorization by US President Joe Biden for Ukraine to use US-made weapons to carry out strikes deep within Russia has raised concerns about the potential for a broader global conflict. These developments have spurred a flight to safety, with investors turning to precious metals like silver as a hedge against rising uncertainty.

    As the week progresses, investors will continue to closely track both the geopolitical situation and the economic data, which will likely shape silver prices in the coming days. The interplay between US monetary policy, China's economic measures, and geopolitical events is expected to keep the market on edge, with silver potentially benefitting from heightened risk aversion.

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