Silver prices put in a strong and sustained rally on Wednesday and Thursday to fully recover the sharp losses seen on Tuesday, after US data pointed to weakness in the economy, raising the chances of interest rate cuts.
Prices pushed as high as $23.05 an ounce, compared with lows of around $21.95 an ounce early Wednesday.
Gold led the way higher for the precious metals complex on Thursday after weaker-than-expected US sales figures raised the prospect of interest rate cuts in the coming months. The gains provided a bullish backdrop for silver prices on Thursday.
The markets have been mulling the chances of a start to an interest rate-cutting cycle by the US Fed at its meeting on May 1, and a recent series of strong economic data has prompted traders to scale back bets on this happening as soon as May. However, the weaker retail sales figures released Thursday challenged this scenario, sending a bullish signal to the precious metals markets.
Silver’s strong rebound from lows of around $22.00 an ounce this week goes some way to solidifying this level as a support base, particularly as this same pattern played out in November and again in late January, with strong buying coming in to lift prices on both those occasions. Should this level give way, however, the market will likely focus on early October’s fall to around $21.00.
Looking ahead, US producer prices are due out on Friday as well as the Michigan Consumer Sentiment numbers, offering the latest snapshot on the economy and potential indicators on expected monetary policy.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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