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.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.