Silver tumbles below $72.00 as safe-haven appeal fades

Finance

Silver tumbles below $72.00 as safe-haven appeal fades

Silver price (XAG/USD) slumps to around $71.90, the lowest since January 2, during the Asian trading hours on Friday. The white metal extends the decline amid easing geopolitical tensions and profit-taking. Traders will closely monitor the upcoming US-Iran talks later on Friday.

A reduction in tensions between the United States (US) and Iran weakens the safe-haven demand for precious metals. Iran aims to focus talks on its long-standing nuclear dispute with Western powers, while the US wants the agenda to include Tehrans ballistic missile program, its alleged backing of armed groups across the Middle East, and its domestic human rights record.

Analysts believe that speculative flows, leveraged positioning, and options-driven trading, rather than physical demand, are the primary drivers of recent price movements. “You‘d seen a lot of speculator positions build up … I don’t think its been fully flushed out,” said Sunil Garg, managing director of Lighthouse Canton.

On the other hand, signs of a weakening US labor market could undermine the US Dollar (USD) and support the USD-denominated commodity price in the near term. The US Bureau of Labor Statistics revealed on Wednesday that US job openings unexpectedly fell in December to the lowest level since 2020, and layoffs rose. Furthermore, applications for US unemployment benefits rose by more than forecast last week.