In the early New York session on Wednesday, the price of silver (XAG/USD) surged to $28.60, driven by significant buying interest amidst escalating tensions in the Middle East. The white metal experienced a notable uptick in demand as geopolitical uncertainties fueled safe-haven bids.
Investors remain apprehensive about the potential spillover of tensions beyond Gaza, particularly as Israel indicated its intention to retaliate against Iran’s recent attack on its territory. The Iranian military’s launch of numerous missiles and drones in response to Israel’s attack on the Iranian embassy near Damascus, Syria, has heightened concerns about regional stability. Despite Iran’s declaration that the matter is closed, reports suggest that any further provocations from Israel could elicit a more severe response from Tehran, intensifying geopolitical tensions and bolstering the appeal of precious metals as safe-haven assets.
In parallel, 10-year US Treasury yields dipped to 4.63%, despite the Federal Reserve’s indication of maintaining higher interest rates for an extended period. This decline in yields on interest-bearing assets mitigates the opportunity cost of holding investments in non-yielding assets like silver, further supporting its price.
The US Dollar Index (DXY) demonstrated strength near 106.20, buoyed by robust US Retail Sales data for March, which has bolstered the economic outlook. Increased household spending, particularly amid tight labor market conditions, signals a positive economic trajectory, contributing to the dollar’s resilience in the market.
Amidst mounting geopolitical tensions and economic indicators, silver remains a sought-after asset, offering investors a hedge against volatility and geopolitical risks while benefiting from safe-haven demand amidst uncertain market conditions.
