Silver Rebounds Amid Market Volatility

Silver Rebounds Amid Market Volatility

Silver rebounds early Wednesday amid market volatility as investors turned to the potential for higher demand in the reviving global economy. The metal experienced a sharp drop on Tuesday due to a halt in the headline grabbing rally.

Traders took advantage of the lower prices on Tuesday amid forecasts that silver will ultimately increase amid demand for the metal to make green-energy products. New U.S. President Joe Biden has prioritized a climate agenda.

Front-month silver futures fell $3.02 Tuesday to $26.40 an ounce on Comex. March futures rallied 16% in the previous three days and climbed to an eight-year high on Monday, settling at $29.42 an ounce. The contract increased 1.9% in January and 47% in 2020. The March contracts are currently up $0.50 an ounce to %26.90 and the DG spot price is $26.82.

The CME Group, which runs the Comex exchange, announced Monday that it was raising the margin requirement for silver futures, an option the exchange can use to curb momentum when markets are volatile. Increasing the margin requirement — to $16,500 per contract from $14,000, effective Tuesday — means that investors have to put up more collateral to trade silver, guaranteeing to the exchange that they can meet their obligations. One contract is for 5,000 ounces of silver.

Treasury Secretary Janet Yellen has called a meeting of top financial regulators this week to discuss volatility in silver and other markets, Reuters reported. It will include the heads of the Securities and Exchange Commission, the Federal Reserve, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission, the Treasury said Tuesday.

April gold futures dropped 1.6% Tuesday to $1,833.40 an ounce on Comex. Front-month futures lost 0.9% in the first two days of this week. They declined 2.4% in January. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the coronavirus pandemic. Currently, the April contracts are up $1.40 an ounce to $1,834.80 and the DG spot price is $1,833.80.

The morning’s ADP employment report was a welcome surprise this morning, showing private companies added 174,000 jobs in January, vs the 50,000 estimate. Gold had little reaction to the huge jump. In upcoming U.S. economic news, investors will be anticipating the key monthly unemployment report due out Friday from the Labor Department. Also closely watched this week will weekly initial jobless claims and fourth-quarter productivity figures on Thursday for signals on the state of the economy during the pandemic.

The COVID-19 virus has killed more than 2.25 million people worldwide and sickened more than 103.9 million. About 25% of the cases — and 20% of the deaths — are in the U.S. The country has almost 26.4 million cases, more than any other nation.

Spot palladium lost 0.5% Tuesday to $2,247.00 an ounce, though it’s up 0.8% so far this week. It plummeted 9% in January after rallying 26% in 2020. Currently, the DG spot price is up $25 an ounce to $2,283.50.

Spot platinum decreased 4.2% Tuesday to $1,093.40 an ounce, though it gained 1.3% in the first two days of this week. It rose 0.5% in January and 11% in 2020. The DG spot price is currently up $10 an ounce to $1,104.50.


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