Silver Price Remains Under Pressure Despite U.S. Dollar Weakness

Silver price makes new lower lows despite the weakness in the bearish U.S. dollar. Markit and Micron investors prepare for the quarterly earnings.

The last trading day of the week starts with a strong equity market following the Fed’s decision and a weak U.S. dollar. But the dollar weakness is not seen in gold or silver, as the two remain under pressure despite rising inflation and uncertainty in Chinese markets.

China was all over the news this week. During the first days of the trading week, the U.S. and European equity markets reacted to the news that a Chinese property developer, Evergrande, might default on its payment obligations.

As the Asian markets declined, the European and U.S. equity markets reacted as well. Investors sold equities and bought safe-haven currencies, such as the Japanese yen or the Swiss franc. The U.S. dollar also strengthened, as it usually does under such conditions, given that it is the de-facto world’s reserve currency.

It all lasted until the Federal Reserve of the United States delivered its monetary policy decision. Then, despite the FOMC statement, the dot plot, and the press conference being all hawkish, the equity markets reversed the recent losses and started trending higher. So did the U.S. dollar and the safe-haven currencies. In short – the week started with a risk-off sentiment, which turned into a risk-on momentum following the Federal Reserve decision.

Silver and gold prices remain depressed, disconnected from the price action in other markets. The opposite is true for oil and natural gas prices – both in bullish trends and putting pressure on their recent highs.

This was the first trading week with the German Dax index having 40 companies in its composition. Starting with the 20th of September, the German index includes ten more companies, moving from Dax30 to Dax40. It is the biggest ever reform of the emblematic index, and many voices say that the timing is not random, given the German federal election to take place on the 26th of September. In any case, the new Dax traded more or less in the same way as the old one – with a bullish tone, keeping an eye on the recent highs.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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