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    XAG/USD: will the price of the precious metals continue to rise? on 08.02.2016

    Amid negative US data last week and due to uncertainty about the US Fed plans, the price of the precious metals including silver has grown.

    The decline caused by the decrease in inflation indices (expenditures on personal consumption and construction, as well as the decline in business activity index (PMI) in the US service sector (53.2 in January versus preliminary value and the forecast of 53.7).

    PMI (ISM) in the US service sector also demonstrated slowdown in the growth pace since the beginning of this year (53.5 in January versus 55.3 in December).

    Negative data made market participants think that the US Fed will not increase interest rate in March.

    President of New-York Fed William Dudley added fuel into the fire saying that the rise in USD is not desirable and can have negative impact on the US economy due to the tough economic conditions.

    Later, president of Cleveland Fed Loretta Mester has denied the opinion of Mr. Dudley saying that US will increase interest rate four times this year, as has been planned.

    Now, it is expected that Janet Yellen will express distinct position in terms of future monetary policy prior to the meeting of the US Fed in March.

    US labor market data released last Friday increased chances of the rise in the interest rate, as unemployment rate fell in January, although the number of new jobs was less than expected (151 000 against the forecast of 190 000). Hourly wages have also increased.

    Attention of the market participants will be focused on the speech by Janet Yellen scheduled for Wednesday. If Janet Yellen indicates that the Central bank will continue to adhere to gradual tightening of the monetary policy, the USD will strengthen its positions in the financial markets, while precious metals, including silver, will drop in price.

    Demand for the precious metals as a safe-haven will increase amid tension in geopolitical situation and instability in the global financial markets.


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