Silver price slips amid US Dollar strength, but record high remains achievable
Silver (XAG/USD) edges 0.2% lower for the day on Tuesday, trading around $48.30 per troy ounce at the time of writing, after setting a new 14-year high at $48.77 on Monday. This consolidation move comes as the US Dollar (USD) regains traction, capping the metal’s bullish momentum.
The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six major currencies, gains 0.4% for the day to 98.53 at the time of writing. The US Dollar benefits from political instability in France and Japan, which is weighing on the Euro (EUR) and the Japanese Yen (JPY). In France, the surprise resignation of Prime Minister Sébastien Lecornu after less than a month in office has revived concerns over the country’s fragile fiscal position. In Japan, Sanae Takaichi’s victory in the ruling Liberal Democratic Party leadership race raises expectations of a return to “Abenomics,” a policy of heavy fiscal spending and ultra-loose monetary stimulus, pressuring the JPY.
This renewed US Dollar strength is curbing appetite for precious metals, already trading in overbought territory after several weeks of gains. Nevertheless, traders remain confident that the US Federal Reserve (Fed) will ease monetary policy before year-end, a factor that continues to underpin safe-haven assets such as Silver.
In a note, Commerzbank said that “Silver is likely to remain influenced by Gold, its ‘big brother’. We are raising our forecast to $49 per ounce by the end of this year and to $50 per ounce by the end of next year.” Analysts believe that the combination of a more accommodative Fed stance and persistent geopolitical uncertainty keeps the medium-term bias tilted to the upside.
In the near term, investors are focused on speeches by several Fed officials this week, including Michelle Bowman and Raphael Bostic, which could offer new clues on the timing of future rate cuts. Any confirmation of upcoming policy easing could revive demand for the grey metal and push it back toward the all-time high at $49.80.
Source : Fxstreet.com
