Silver Slides From 13-Year High Despite Rising Geopolitical Tensions

 

Silver Slides Despite Rising Geopolitical Tensions 

(Bullion News Network) – Silver prices fell again today, handing the precious metal its third consecutive loss after a series of gains drove it to a 13-year high. The spot price of silver peaked at $37.12 per troy ounce on Tuesday before losing ground on Wednesday, Thursday, and today. Silver dropped below the $37/ozt line on Wednesday, closing at $36.74 before losing more ground on Thursday and Friday. The precious metal is now set to close the day down $0.69/ozt from Thursday at a price of $36.10 per troy ounce. While the price drop may give some investors pause, silver is still up over 9% from its May 30th closing price of just under $33/ozt. 

What’s driving silver’s recent price run? Analysts say that industrial demand continues to play a vital role in silver’s price action. Demand from the solar panel sector accounts for a significant percentage of annual demand for silver, and growing interest from other countries, including China, in solar energy may be leading to a supply deficit of the precious metal. More recently, silver likely benefited from an increase in geopolitical uncertainty, which has historically been a demand driver for safe haven assets like gold and silver. Combined, heightened geopolitical tensions and heightened industrial demand may be driving silver prices to record heights.

Silver pulled back again, despite another bout of rising tensions in the Middle East. Iran and Israel continue to exchange airstrikes, and U.S. President Donald Trump has refused to eliminate the possibility of American intervention in the conflict. At the center of the controversy is Iran’s nuclear program, which both Israel and the United States say violates a 2015 nuclear deal to which Iran was a signatory. Iran argues that its nuclear program is exclusively intended to develop nuclear-based energy solutions for the country, but critics of the state’s actions say Iran’s lifting of uranium enrichment caps, a key provision of the 2015 agreement, is in violation of the existing nuclear deal signed between Iran and other world powers.

American markets edged lower, with the Dow, S&P 500, and Nasdaq losing steam heading into the weekend over concerns that the conflict in the Middle East may result in American intervention. All three markets slid to open the day, failing to recover before closing in the red. This led to a 0.2% weekly loss for the S&P 500, while the Nasdaq and Dow each had 0.2% and 0.02% gains, respectively.

Gold moved sideways throughout the day, eventually closing with a loss of less than $1 per troy ounce. Gold prices tend to thrive during periods of heightened geopolitical tensions and conflict, so some analysts predict that the metal may surge in the face of escalating tensions between Israel, Iran, and the United States. This week, the precious metal is set to close nearly $60 lower than last Friday’s closing price. 

On Wednesday, the Federal Reserve voted to leave interest rates unchanged for another meeting. In the post-meeting press conference, Fed Chair Jerome Powell commented that he believes the FOMC remains in a good position to respond to economic developments:

We believe that the current stance of monetary policy leaves us well positioned to respond in a timely way to potential economic developments. 

Like in previous statements, Powell acknowledged the economic uncertainties associated with the Trump administration’s monetary policies, including the historic slate of tariffs introduced by President Trump in February. “Individual forecasts are always subject to uncertainty and, as I have noted, uncertainty is unusually elevated,” Powell said. On tariffs specifically, Powell commented that the “effects of tariffs will depend […] on their ultimate level.” The economist remains confident that “increases in tariffs this year are likely to push up prices and weigh on economic activity.”

Next week, a fresh set of economic data reports could give Americans – and the Federal Reserve – more insight into where the economy may be heading. The June consumer confidence report is due next Tuesday and is expected to increase 1.1 points from 98.0 to 99.1. Initial jobless claims, due on Thursday, are projected to increase from 245,000 to 248,000. The big data drop happens on Friday, when traders will be able to review the Personal Consumption Expenditures (PCE) index for the month of May. This report should give analysts more insight into where inflation rates are heading. 

The gold-silver ratio climbed on the lopsided price action, adding 1.86 points to close just over 93.5:1. Gold will end the week down nearly $60 per troy ounce. Silver will close the week down $0.20, but the precious metal is down over $1 from its Tuesday peak.