The iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver, were decked Wednesday as the dollar rallied, but some commodities market observers still see more upside coming for the white metal.

Silver ETFs are pushing to the upside amid increased expectations of more Federal Reserve rate cuts, even as some investors locked in profits from the white metal’s recent rally. Silver is believed by many investors to be inversely correlated with interest rates.

Rising interest rates make bonds and other fixed-income investments more attractive so that the money will flow into higher-yielding investments, such as bonds and money market funds, and out of precious metals, which offers no yield at all during times of higher interest rates, and back into metals ETFs.

“Silver markets pulled back slightly during the trading session on Wednesday, reaching towards the $18.50 level. At this point, it’s very likely that the market will respect this area, but even if it doesn’t there is a significant amount of support underneath that should continue to come into play,” reports FXEmpire.

With Risk-Off, Silver Goes Higher

The risk-off trade environment is also driving silver prices higher, as the white metal is sometimes regarded as a stock of wealth and an alternative investment too risky assets during economic and political uncertainty, though often less so than its golden cousin.

“Keep in mind that the precious metals markets continue to be a safe haven for traders as there are a lot of negative headlines out there that have people in a ‘risk-off’ move,” notes FXEmpire. “That being said, buying on the dips should continue to offer plenty of opportunities.”

Traders looking to juice short-term silver gains can consider leveraged products, such as the VelocityShares3x Long Silver ETN (USLV). USLV seeks to replicate, net of expenses, three times the S&P GSCI Silver Index ER. The index comprises futures contracts on a single commodity. The fluctuations in the values of it are intended generally to correlate with changes in the price of silver in global markets.

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