Silver futures rose sharply on Monday, tracking strong gains in gold prices as disappointing U.S. economic data weighed on the U.S. dollar, boosting dollar-denominated commodities.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.45% to trade at 82.20, the weakest level since April 17.
Silver prices often move inversely to the U.S. dollar, as the metal becomes less expensive for buyers using other currencies.
On the Comex division of the New York Mercantile Exchange, silver futures for July delivery traded at USD24.33 a troy ounce during European morning trade, up 2.3% on the day.
Comex silver prices rose by as much as 2.6% earlier in the session to hit a daily high of USD24.38 a troy ounce.
Silver prices were likely to find support at USD22.86 a troy ounce, the low from April 24 and near-term resistance at USD24.83, Friday’s high.
Silver’s gains came as the U.S. dollar weakened against most of its major counterparts as downbeat U.S. GDP data on Friday pressured demand for the greenback.
The Commerce Department said U.S. gross domestic product expanded by 2.5% in the three months to March, missing expectations for growth of 3.0%.
The disappointing data added to expectations that the Federal Reserve will continue its monetary easing program, amid lingering concerns over the outlook for the U.S. economic recovery.
Market players will be focusing on Wednesday’s policy statement from the U.S. central bank, for further hints regarding the future of the central bank’s monetary easing program.
Investors will also be awaiting the outcome of the European Central Bank’s policy meeting on Thursday, amid growing expectations for a rate cut, as well as Friday’s closely watched report on U.S. nonfarm payrolls.
Silver, like gold, can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies.
Elsewhere on the Comex, gold for June delivery rose 1.3% to trade at USD1,472.15 a troy ounce, while copper for July delivery added 0.3% to trade at USD3.196 a pound.
Courtesy : Investing.com