Silver Price News: Silver Adds to Monday’s Gains as US Dollar Dips

Silver prices made solid gains on Tuesday, building on Monday’s strength, and pushing up through the $28.50 an ounce mark after the US dollar weakened further.

Prices briefly rose as high as $28.75 an ounce but settled back into a range of $28.58 to $28.64 an ounce by late afternoon. That compared with $28.29 an ounce in late trades on Monday.

Silver and gold prices both took support from the US dollar, which weakened against other major currencies on Tuesday, falling to a one-month low against the Euro.

Elsewhere, data released on Tuesday showed that US producer price inflation rose by 0.5% in April, some way above market expectations of a 0.3% gain.

Higher inflation bolsters the case for maintaining interest rates at higher levels by central banks, and this would normally be a bearish element for precious metals prices. However, signs of persistent inflation can also provide an incentive to buy gold and silver as a hedge against the wealth-eroding effect of inflation on currencies.

After a period of sagging silver prices in late April and early May, the recent gains have pushed prices close to levels last seen in the middle of April when the market was scaling the $29.00 an ounce area.

Looking ahead, the markets will be watching out for US inflation figures for April due for release on Wednesday, as well as retail sales figures for April, for the latest take on the US economy.