Silver prices fell sharply on Thursday to trade well below $23.00 an ounce for the first time since December 13.
Prices moved a few cents on either side of $23.00 an ounce for most of the morning session, but the afternoon saw prices fall sharply to as low as $22.50.
The afternoon price slump came after data revealed a rise in monthly US inflation in December, which propelled the US dollar higher against other currencies on Thursday.
This effect was further compounded by a surprise drop in weekly US initial jobless claims. Together, the latest figures pointed to a stronger-than-expected US economy, which worked against expectations of an early cut to interest rates during the first quarter. Higher interest rates decrease the appeal of non-interest-bearing assets such as gold and silver.
The latest round of macroeconomic data also pushed gold prices down later in the day Thursday, increasing the downward pressure on silver.
Looking ahead, Friday will see the release of several data points for the market to chew over. China’s balance of trade figures are set to provide the latest snapshot of the health of China – a major consumer of metals. The markets will also be watching for the monthly US Producer Prices Index for a further pulse check on inflation levels.
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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