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The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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Silver (XAGUSD) falls to 3-year low in risk averse market

XAGUSD - The white metal witnessed a severe price crash during the Asian session today. Investors seem to have returned to the risk aversion mode leading them to sell off risky assets ahead of the CPI report to be released today. The price of silver was therefore pushed down to its lowest point in three years at $18.85. Investors seem to have lost appetite for commodities hitherto used as a hedge against inflation.

The aggressive interest rate hikes by the Fed and signals of possible rate hiking in July have forced investors to sell their white metal holdings and purchase the safe haven – the US dollar.

Silver has been pegged to the US dollar and is primarily affected by the strong dollar strength. With the dollar index rising to a new high at 108.4, marking its highest point in twenty years, silver and every other commodity pegged to the US dollar were bound to fall.

Silver is currently seeking to establish new support for its recovery at its current position. Still, the bears are not taking any break. The selling pressure for silver is currently very high, and analysts predict higher lows for this asset. The next target for silver could be the support established in 2019 at $18.13.

Nonetheless, the outcome of the CPI report to be released today will determine the next trend for silver and if the current downward trend will continue unchecked. A higher reading from the CPI data will likely result in a further interest rate hike for the US dollar. This will further discount the price of silver and other risky assets.

What is the Risk Aversion Mode?

The risk aversion mode, also known as risk-off mode, is when investors avoid risky assets. Risky assets include commodities, cryptocurrency, and stock to invest in the US dollar and other less risky investments. Often investors are attracted to the US dollar at such points due to the high-interest rate offered. This risk aversion mode had become a winter for silver and other risky assets. Thus, buyers often showed low interest in buying more, while existing investors often sold off their long holdings. This explains why the price of silver was pushed to a 3-year low during the Asian session today.

Last Updated: 12/07/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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