- Silver prices have traded in subdued fashion on Friday as a sharp pick up in risk appetite dampened safe-haven demand.
- Spot prices have remained subdued in the low $24.00s with the $24.50 mark acting as a ceiling.
- As the war in Ukraine rages on and the Western sanctions response to Russia evolves, uncertainty remains high.
A surge in risk appetite that has seen US equity push back to highs on the week and risk-sensitive currencies perform well is weighing heavily on safe-haven assets like precious metals, government bonds and the US dollar and yen. Hopes that there might be an opportunity for diplomacy between Russia and Ukraine that could bring an end to the war just as it is getting started are one factor fuelling the better mood. The West’s “soft” sanction response to Russia (so far) that has avoided hitting the country’s energy sector is another. Spot silver (XAG/USD) prices have unsurprisingly struggled to make headway on the final trading day of the week, with the $24.50 level acting as a ceiling to the price action.
At current levels around $24.10, silver prices are down about 0.5% on the day and nearly 6.0% lower versus Thursday’s highs above $25.50. Whether the air continues to come out of silver’s recent geopolitical tensions-fuelled rally (XAG/USD is still up more than 7.0% on the month) will be headline dependent. If the chatter about talks between Moscow and Kyiv that could result in an early end to the war does continue to gain traction, that could be a negative catalyst that sends spot silver back below $24.00.
Alternatively, momentum seems to be building towards Western nations kicking Russia out of the SWIFT international payments system, which could reignite some fears about economic disruption. If momentum also builds towards energy sanctions, economic uncertainty and demand for inflation protection could easily lift XAG/USD back above its 200-Day Moving Average at $24.20 and into the upper $24.00s. Traders should remain on their toes. Dependent on developments over the weekend, things could go either way quite aggressively next Monday.