Although silver has dipped back below $21 an ounce in early Wednesday trading, the shot in the arm the precious metal has received on Tuesday is still more than strong enough to shift it out of the range-bound narrative the metal had been experiencing in recent weeks.
Weaker-than-expected recent US economic and jobs data have raised the prospect of the Federal Reserve having to be less aggressive with its upcoming interest rate hikes to avoid tipping the world’s largest economy into a recession.
Given that it was the switch to a hawkish policy in which the Fed implemented a series of large rate hikes that proved the trigger for silver’s multi-month decline from April onwards to its lowest levels in more than two years, the prospect of a more accommodative Fed going forward has been leaped upon by silver investors.
After reaching its nadir in late August and early September, silver has shown much greater price resilience than gold in recent weeks with the metal looking greatly undervalued given its strong fundamental outlook. It has almost been looking for a catalyst to push it higher with this week’s economic data providing it. How high silver climbs to and for how long these gains are held onto will be determined initially by the strength of the US payrolls data due out on Friday and then further out the action the Fed actually takes on its next interest rate move when the committee meets later this month.
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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