Silver and Copper Prices Fall Amidst a Strong Dollar and Reduced Demand from China
Silver’s Sharp Decline:
Silver experienced a significant drop of 7.02% on Tuesday, pulling down the entire precious metals complex along with it. According to independent trader Tai Wong, “Silver’s decline dragged the entire complex down.” The silver price fell to $148.7210 per ounce, with a short-term peak of $54. Wong added that “we might see substantial volatility in silver as long as gold remains firm, despite sentiment wavering below $50.”
Silver’s Yearly Surge and Subsequent Retreat:
Silver had previously surged nearly 80% this year, driven by the same factors that boosted gold and a historic shortage in the London market. This rapid increase led to operators shipping metal to London to alleviate the shortage, causing silver inventories in New York to decrease.
Copper Prices Also Fall:
On the same day, copper prices also dropped due to a strong dollar and reduced demand from China, the world’s largest consumer of industrial metals. Although copper futures for three months fell 0.6% to $10,626 per tonne, the decline was limited by a decrease in available stocks at the London Metal Exchange (LME).
China’s Limited Appetite for Metals:
“China is not currently a buyer at these prices, and we are in the calmer part of the month regarding trade flows,” explained Alastair Munro, metals strategist at Marex.
Key Questions and Answers
- Q: Why did silver and copper prices fall? A: Both metals were affected by a strong US dollar and reduced demand from China, the world’s largest consumer of industrial metals.
- Q: What caused silver’s sharp increase earlier this year? A: Silver’s price surged nearly 80% this year due to similar factors driving gold higher and a historic shortage in the London market.
- Q: How did the strong dollar impact copper prices? A: The US dollar’s strength put downward pressure on copper prices, along with reduced demand from China.
- Q: Why is China’s appetite for metals limited currently? A: According to Marex strategist Alastair Munro, China is not actively buying metals at current prices, and trade flows are relatively calm during this part of the month.
