Silver hits four-week high on Chinese demand forecasts
Silver prices rose in European trade for the second session, hitting four-week highs on expectations of improving Chinese demand as authorities launch measures to support growth.
The white metal is heading for the second weekly profit in row on bets the Federal Reserve will raise interest rates next week.
Silver Prices Today
Silver prices rose 0.7% to $24.43 an ounce, the highest since May 11, with a session-low at $24.22, after rising 3.6% yesterday, the biggest profit in two months as dollar lost ground following weak data.
Chinese Demand
The six major state-owned commercial banks in China cut their interest rates on deposits in an attempt to boost growth in the country.
Such stimulating measures come following a spate of weak Chinese demand, which showed weaker exports and increasing unemployment due to the continuous impact of the Covid 19 shutdowns.
Weekly Trading
Silver prices are up 3.5% so far this week on track for the second weekly profit in row away from recent two-month lows.
US Rates
Odds for a 0.25% Fed rate hike in June tumbled from 30% to 25% yesterday following the labor data.
Recent US data showed an unexpected spike in unemployment claims last week in a sign of a slower growth in the labor sector.
Several analysts suspect the US economy might undergo a recession this year, in turn pressuring the Federal Reserve to pause its aggressive path of policy tightening.
Euro on track for weekly profit on renewed hopes on the interest rate gap
Euro declined in European trade for the first session in three days against dollar off two-week highs amid profit-taking, with the common currency still heading for weekly gains on hopes the US-European interest rate gap will shrink soon.
Markets are betting on a European rate hike this month following bullish remarks by several ECB officials and after surprise rate hikes in Australia and Canada.
Conversely, recent disappointing US labor data hurt chances of a rate hike at next week's Fed meeting.
EUR/USD fell 0.1% to 1.0772, with a session-high at 1.0785, after rising 0.8% yesterday, the second profit in a row, and the largest since March 22, marking two-week highs at 1.0787.
Weekly Trading
Euro is up 0.6% so far this week against dollar on track for the first weekly profit in five weeks.
European Remarks
European Central Bank President Christine Lagarde said ahead of European Parliament in Brussels that inflationary pressures in the euro zone remains strong, and future decisions on interest rates must be based on bringing inflation back to 2%.
European Central Bank member Gabriel Makhlof said European interest rates are likely to be high for an extended duration before reaching its peak.
Global Central Banks
Both the Reserve Bank of Australia and Bank of Canada raised interest rates by 25 basis points, which were unexpected moves.
European Rates
Such recent bullish remarks and sudden moves by global banks indicate a likely decision by the ECB to raise interest rates for a longer duration.
Markets are now fully pricing in a 0.25% rate hike at next week's meeting by the European Central Banks, and there's a likelihood for an additional 0.25% rate hike in July.
US Labor Market
Recent US data showed an unexpected spike in unemployment claims last week in a sign of a slower growth in the labor sector.
Several analysts suspect the US economy might undergo a recession this year, in turn pressuring the Federal Reserve to pause its aggressive path of policy tightening.
US Rates
Odds for a 0.25% Fed rate hike in June tumbled from 30% to 25% yesterday following the labor data.
Price Gap
The current gap in interest rates between Europe and the US stands at 150 basis points and could shrink to 125 basis points next week.
Gold climbs over 1%, approaching $2,000 once more
Gold prices rose on Thursday as the dollar lost ground against most major rivals following data.
Gold was also boosted by the decline in US treasury yields, in turn boosting chances of no change in US monetary policies next week at the Federal Reserve's meeting.
Earlier US data showed unemployment claims rallied to 261 thousand last week, the highest since October 2021, and up 28 thousand from the previous reading.
US Treasury Secretary Janet Yellen stated the US banking sector's liquidity remains good, and the US economy is in a good shape due to strong consumer spending, however she warned from pressures on the commercial real estate sector.
She expects US authorities to carry on efforts to battle inflation in 2024 and 2024.
Otherwise, the dollar index fell 0.7% as of 20:20 GMT to 103.3, with a session-high at 104.07, and a low at 103.3.
Gold spot prices rose 1.03% as of 20:30 GMT, or $20.3 to $1,978.5 an ounce.
