The price of silver changed direction and rallied during last week. Is silver bound to recover anytime soon? Let’s examine the recent news that may affect silver and the silver ETFs.
The modest recovery of silver has reflected in the rise in demand for silver ETFs such as iShares Silver Trust (SLV). During the previous week, the Silver Trust’s price inched up by 0.5%. Conversely, other Silver investments such as Silver Wheaton (SLW) continued to fall and shed 1.6% from its value. Looking forward, the minutes of the last FOMC meeting, the JOLTS survey, the change in demand for silver in India and the U.S dollar could affect silver. Let’s analyze these issues.
U.S economy, FOMC and silver
During last week, the U.S non-farm payroll report showed 192,000 jobs added in March – this number was close with the market’s expectations. Nonetheless, the market’s reaction wasn’t positive and following the release of this report, precious metals rallied, while the U.S dollar depreciated against leading currencies. The linear correlation between the changes in employment and price of silver is -0.344, which is mid-strong and negative. This relation suggests, whenever the labor market doesn’t grow by a high pace (and doesn’t beat the expectations) the price of silver tends to fall.
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