Silver continued to make headway, with a move to $23 per ounce taking the price to levels last seen at the end of September.
Like gold, silver is a non-yielding asset, so recent US data suggesting that US interest rates might remain higher for longer could be considered a headwind to price appreciation as higher rates increase the opportunity cost of holding zero yield assets.
However, Tuesday’s US data also signalled stronger retail sales, industrial production and manufacturing, all of which are broadly supportive of silver demand, c. 45-50% of which is derived from industrial applications.
Moreover, recent global economic data has also become more consistent with a ‘soft landing’ scenario with a firming trend in Asia. The Eurozone remains a laggard, though economic data is now disappointing by a smaller margin. It also seems highly likely that the next move in Eurozone rates will be down.
Thus, silver is currently benefiting from the prospect of both a cyclical pickup in industrial demand and the more secular growth prospects generated by new silver applications such as photovoltaics. A renewed bid for ‘safe haven’ assets, completes the current, supportive, demand dynamic.
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