Although silver prices saw some mild profit taking from investors early last week, the metal took a 2.3% nosedive on Friday, Aug. 4. That loss was responsible for the price of silver’s 2.5% weekly decline since Friday, July 28.
Friday’s drop came after the release of the July jobs report that showed payrolls had risen by 209,000 jobs. That smashed economists’ expectations of 180,000. The June number was also revised up to 231,000 from 222,000.
But the even bigger piece of data was the unemployment rate, which fell to a 16-year low of 4.3%. That’s bolstered the Fed’s case for another interest rate hike in 2017, which pushed the U. S. Dollar Index (DXY) up from its two-and-a-half-year low of 92.84 on Thursday, Aug. 3, to 93.49 on Friday, Aug. 4.
Since silver is priced in U. S. dollars, any rise in the dollar’s value makes gold more expensive to users of other currencies. That usually reduces demand, which weighs on the silver price and explains Friday’s 2.3% decline.
However, all of this just means silver is trading at a great bargain. Silver’s losses have pushed the gold/silver ratio back above 77, meaning it trades at a value compared to gold. I think this could cause a wave of buying behavior and send silver prices much higher this year.
Before I get into my bullish silver price prediction for the rest of 2017, let’s look at the price’s day-to-day movements last week…
This post was published at Wall Street Examiner on August 7, 2017.
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