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Silver rallies toward $70 as US dollar weakens

Silver was up 2.4% on the day near $69.75, with a surprise US Treasury debt buyback pointing to fiscal worries and a softer dollar outlook.

Reported · Written up by our desk · Precious Metals

Silver accelerated higher on Friday, trading around $69.75, up 2.4% for the day, after reaching its highest level in two months. The move also left silver on track for a weekly gain of more than 7%, driven largely by persistent weakness in the US dollar, according to FXStreet.

FXStreet links the rally to a surprise US Department of the Treasury announcement of a debt buyback program, which the report says included plans to at least double purchases of longer dated government securities to help contain borrowing costs. The initial reaction lowered Treasury yields and the dollar, mechanically boosting the appeal of dollar denominated precious metals, though yields later recovered somewhat without stopping silver’s advance.

Investors are also focusing on longer term implications of US fiscal policy, including rising government debt and large budget deficits, FXStreet said. It notes Commerzbank’s view that the announcement signals a preference for a weaker dollar rather than accepting persistently higher long term interest rates, which continues to weigh on the greenback and support silver.

Looking ahead, FXStreet said markets are turning to preliminary August S&P Global Purchasing Managers Indices, with forecasts calling for a small easing in the Manufacturing PMI to 53.8 from 53.9 and a decline in the Services PMI to 54.0 from 54.6. It added that softer data could further pressure the dollar and support silver, while oil linked inflation risks and a sustained rebound in Treasury yields could become headwinds.

Latest closeSilver $64.83 ▼0.1%

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