Silver (XAG/USD) advanced during European trading on Friday, crossing the $60 threshold as a softer US dollar and declining crude oil prices bolstered demand for the white metal. The precious metal traded 0.4% higher at approximately $60.22, extending gains from earlier in the week.
Dollar Weakness Supports Silver
The US Dollar Index (DXY), which tracks the greenback against six major currencies, fell 0.16% to near 100.7, touching a three-week low of 100.60 during the session. A weaker dollar typically enhances the appeal of dollar-denominated commodities like silver, making them more attractive to investors holding other currencies.
Market participants attributed the dollar's decline to easing concerns over prolonged geopolitical tensions between the United States and Iran. While a US official confirmed that technical talks with Iran are ongoing, President Donald Trump stated that the memorandum of understanding with Tehran is effectively over, though he noted Iran "wants the deal badly." The mixed signals have kept investors cautious but reduced safe-haven demand for the dollar.
Oil Price Pullback Adds Support
Silver also found support from a sharp correction in crude oil prices after strong gains earlier in the week. West Texas Intermediate (WTI) crude remained near $72.00, consolidating Thursday's losses. Lower oil prices can reduce inflation expectations and ease pressure on the Federal Reserve to maintain an aggressive tightening stance, indirectly benefiting precious metals.
Investors are now looking ahead to next week's release of the US Consumer Price Index (CPI) data for June, which will provide fresh clues on inflation trends and the trajectory of Fed monetary policy. A softer CPI reading could reinforce expectations of a less hawkish Fed, further supporting silver and other metals.
Gold Slips on Rate Expectations
In contrast, gold prices edged lower on Friday and were on track for a weekly decline. Spot gold fell 0.1% to $4,115.79 per ounce, while US gold futures for August delivery declined 0.4% to $4,124.90. The yellow metal was poised to register a weekly loss of 1.4%.
Escalating US-Iran tensions have heightened inflation concerns, strengthening expectations that the Federal Reserve could maintain elevated interest rates. Higher rates increase the opportunity cost of holding non-yielding assets like gold, weighing on its price.
For context, silver's recent performance contrasts with earlier trends when it held near $58 amid Hormuz oil risk and Fed rate uncertainty, as covered in our previous analysis. The current breakout above $60 reflects shifting dynamics in currency and commodity markets.
Meanwhile, broader market sentiment remains influenced by geopolitical developments and monetary policy expectations. Investors are also monitoring other asset classes, including equities and cryptocurrencies, for signs of risk appetite shifts.
This article is for informational purposes only and does not constitute financial advice.
