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What’s happening: Silver prices edged higher on Wednesday, continuing its upward trajectory during the second quarter.
What happened: Silver gains outpaced that of gold and almost all major financial markets in the second quarter.
Speculations of rising demand and the global silver deficit continued to lend support to the white metal on Wednesday.
Why it matters: Silver prices breached the $30 mark on Tuesday, after having fallen to as low as $28.87 on June 26. The yellow metal remained above $30 on Wednesday.
More than being a store of value, silver is in high industrial demand. While gold prices have risen lately due to the yellow metal’s safe-haven status in the face of geopolitical uncertainties, silver has climbed on account of its high demand from the electric vehicle and solar panel industries.
Despite the rising demand for silver in industrial use, mining of the white metal has been broadly stagnant over the past decade.
The transition to renewable energy is expected to worsen silver’s supply-demand gap, taking the global silver deficit to a record high of 215.4 million ounces, according to the annual publication of the “In Gold We Trust” report.
Weakness in the US dollar also lent support to silver prices on Wednesday. A weaker greenback makes metals more attractively priced for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, declined 0.33% to 105.37, after the release of disappointing economic data.
The US reported a rise in initial jobless claims by 4,000 to 238,000 in the week ending June 28. The figure came in worse than market expectations of 235,000. Continuing unemployment claims rose by 26,000 to 1,858,000 in the week ending June 22, reaching the highest level since November 2021.
Silver for August delivery climbed 3.79% to $30.765 an ounce on Wednesday. Meanwhile, gold for August delivery rose 1.33% to $2,364.50.
What to watch: Investors will continue monitoring growth in the EV market and the global transition to renewable energy. Movements in the greenback will also remain in focus, although trading may be subdued today with the US markets closed for Independence Day.
Context: Most leading Asian stock indices climbed on Wednesday, with Japan’s Nikkei 225 outpacing the gains in others.
Details: The Asian markets mirrored the rise in US stock indices, especially in tech stocks, with the Nasdaq 100 closing above the psychological barrier of 20,000.
Federal Reserve Chairman Jerome Powell said late Tuesday that the latest data releases “suggest we are getting back on a disinflationary path.” This triggered some speculations of rate cuts by the Fed this year, although Powell had stated that more evidence was required to turn hawkish.
Japan’s Nikkei 225 climbed for the fifth consecutive day on Wednesday, gaining 1.26% to settle at 40,580.76.
India’s Sensex ended the trading day higher by 0.69% at 79,986.80. Sentiment was supported by the HSBC India services PMI being revised higher to 60.5 in June, from a preliminary reading of 60.4. This marked an increase from May’s 60.2 and was the 35th straight month of growth in services activity.
Hong Kong’s Hang Seng rose for the fourth day in a row, adding 1.18% to close at 17,978.57, while Singapore’s FTSE Straits Times Index gained 1.41% to finish trading at 3,415.51 and the Asia Dow was up 0.71% at 4,132.54.
China’s Shanghai Composite bucked the trend, declining by 0.49% to 2,982.38. China’s services PMI declined to 51.2 in June, from a 10-month high of 54.0 in May. Although this marked the 18th consecutive month of growth in services activity in the country, the figure came in lower than market expectations of 53.4.
What to watch: Investors await the release of economic data on household spending and forex reserves from Japan. The country’s household spending had risen by 0.5% year-on-year in April and is expected to grow by 0.1% in May. Japan’s forex reserves had contracted to $1.232 trillion in May, from $1.279 trillion in the previous month.
Singapore’s retail sales, which shrank by 1.2% year-on-year in April, will also be in focus.
Other Markets: US indices closed mixed on Wednesday, with the Dow Jones index down by 0.06% and the S&P 500 and Nasdaq 100 up by 0.51% and 0.88%, respectively.
Russia launched a series of attacks on Kharkiv, Ukraine’s second-largest city. The safe-haven US dollar index declined in forex trading this morning.
Australia’s trade surplus on goods narrowed to $5.77 billion in May, versus $6.03 billion in the previous month, and came in below market expectations of $6.68 billion, which exerted pressure on the AUD/USD forex pair.
Russia’s annualised GDP growth accelerated to 4.50% in May, from 4.40% in the prior month. Despite this, the RUB/USD remained under pressure in forex trading this morning.
Italy’s new passenger car registrations rose to 15% in June, after a decline of 6.60% in May, lending support to the EUR/USD forex pair.
The US EIA said US crude oil inventories fell by 12.157 million barrels in the week ending June 28. Although this was the steepest drawdown in stockpiles in a year and came in higher than market expectations of 0.9 million barrels, WTI crude oil prices fell slightly this morning.
Brazil’s car production and new car registrations, Canada’s services PMI, South Korea’s current account, Turkey’s auto production and auto sales, Australia’s retail sales, and Indonesia’s foreign exchange reserves.
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