Silver is showing early signs on Friday that the price’s sharp drop so far in August may be reaching its bottom a little below $23 an ounce.
Certainly the metal’s healthy fundamental outlook would support this stabilisation in the price but as ever with silver, what the Federal Reserve and its officials do and say has a greater impact than the metal’s pure supply and demand outlook.
Yesterday’s US inflation data was welcomed by markets as it showed the rate at which consumer prices are rising in the world’s largest economy continuing to track down towards the Fed’s 2% target. The question that remains is whether the US central bank officials will see this as sufficient for them to hold off on another interest rate when the committee meets next month.
Already there has been one dissenting voice with Mary Daly, the President of the Federal Reserve Bank of San Francisco stating that there is more work still to be done for the Fed to achieve its inflation goal. These are words that silver investors will not want to hear as it has been the Fed’s series of interest rate hikes that first prompted a multi-month slump in the metal’s price last year and have stymied its recovery efforts so far this year.
If however, the Fed does decide to leave interest rates unchanged next month, then this could be the moment for silver’s strong fundamental case to finally get a sustained look-in and for the price to embark on a rally first up to the highs of last year and next above $26 an ounce and ultimately on to $30 an ounce.
Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
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