After making big advances during the week pushing very close to that all important $49.00 level per ounce, silver furthered those upward movements from last Wednesday. Now, as economic uncertainty spreads, silver prices are taking off higher and drawing strong bullish interest. This chaos has mainly been due to the current US federal government shutdown, which has reached an unprecedented length and appears to have no end in sight.
Now add the fact that the prolonged government shutdown is rattling financial markets. Consequently, the US Dollar Index (DXY) has pulled back for the second straight day. In response, investors are watching foreign exchange pairs and commodity price inflations for signs of a turn. The GBP/USD jumped above the 1.3100 level, a testament to the pound’s strength against the dollar. At the same time, the USD/JPY fell sharply, returning to the low sub-153.00 area.
Our energy sector is now feeling similar pressure. Dollar per barrel West Texas Intermediate (WTI) prices dropped today for the third straight day, dipping under the $60.00 level. This drop in oil prices could be a harbinger of larger worries about economic activity with the continuing government impasse.
On the cross currency markets, EUR/USD was the biggest gainer, advancing to multi-day highs around the 1.1500 level. This increase reflects an important change in sentiment among traders, as they continue to find their footing in an increasingly turbulent economic environment. In like manner, AUD/USD extended upon the recovery efforts established on Wednesday, a sign that Australian dollar values may be more resilient than they seem.
Gold prices upped their momentum this week, rising to three-day highs above the $4k level per troy ounce. Even with all the turmoil from the federal government’s shutdown, the yellow metal had a good week. Investors are running to gold once again, looking for a safe-haven in these uncertain times.
As we know well, global markets are intricately interwoven. Geopolitical events can widely affect commodity and currency values. With silver prices nearing critical resistance levels, all eyes will be looking for any events that might shift the trading paradigm and open fresh opportunities.