The silver price fell 3.46 percent on Thursday 23 July to 57.64 dollars per troy ounce, the sharpest drop in months. Gold lost 1.98 percent that same session and slid back to 4,047.80 dollars, again close to the important support around 4,000 dollars. Early Friday morning, the first rates confirmed that the drop holds: gold traded around 4,024 dollars and silver around 57.24 dollars, barely higher than Thursday’s closing rate.
Silver loses almost all its weekly gain
The contrast with earlier this week is striking. Just two days earlier, on Tuesday 21 July, silver jumped over 4 percent on short covering and a wave of safe-haven demand. On Thursday the market gave back a large part of that gain in a single session. For those following the rate only day by day, that looks like a nervous market. For those wanting to sell old silver, mainly today’s level counts, not the day-before-yesterday’s peak.
Why rates won out over war risk
Normally, geopolitical unrest pushes gold and silver up, because investors seek safety. On Thursday precisely the opposite happened, despite a new escalation in the Middle East. The reason lay in the bond market. US jobless claims fell more sharply than expected, to the lowest level in decades, pointing to a labour market that stays more resilient than thought. Investors thereupon lowered their expectation of a quick rate cut by the Federal Reserve, which takes a decision next Wednesday 29 July. The yield on ten-year US Treasuries climbed towards 4.7 percent and the dollar strengthened further, two factors that make precious metals without a yield of their own less attractive.
A new front in the oil market
At the same time, the conflict around Iran escalated further. The Yemeni Houthis claimed a drone and missile attack on two Saudi oil tankers in the Red Sea, which according to observers opens a new front alongside the Strait of Hormuz. Crude oil thereupon briefly broke above 100 dollars per barrel. Normally that is the kind of news gold and silver react to with a rate rise. On Thursday, however, the rate shock comfortably won out over the flight reflex, a sign that the market is currently looking mainly at the Federal Reserve and less at Iran.
What this means for those wanting to sell old gold or silver
For anyone with old gold, silver cutlery or coins at home, a drop of a few percent changes little about the bigger picture. Both gold and silver still trade far higher than a year ago, and a correction of a few days says nothing in itself about the longer-term direction. That is precisely why De Munter advises having the current rate determined by a buyer at the moment of sale, and not by a price you read somewhere online or in the news. Daily rates move, sometimes sharply, and a sale price that is correct today can already be out of date tomorrow.
Next week will in any case be an important week for the gold and silver market. Besides the Fed rate decision of 29 July, the situation around Iran and now also the Red Sea remains unpredictable. Anyone considering selling would do well to have the rate checked around the moment of sale itself, rather than relying on figures a few days old.