Silver is holding above $20 an ounce, reinforcing hope among holders of the precious metal that the price did indeed reach its bottom in July and that August can bring further upsides.
The decisions by central banks will be a key determinant of how much further silver can recover with the Reserve Bank of Australia and the Bank of England both expected to announce increases of 50 basis points to their benchmark rates later this week.
While these two banks don’t carry the same sway as the Federal Reserve in terms of the price reaction they have on markets, investors will still be interested to hear the bankers’ view on the state of their respective economies and how much further they feel they will need to raise rates.
Given that it was this change to a more aggressive monetary policy that sparked silver’s slump in price from mid-April onwards, these rate decisions will still be a source of worry for holders of the metal.
The hope that silver and indeed the broader market is clinging to is that inflation is peaking and will track lower over the coming months and with the global economy still in a very fragile state, central bankers will reduce their path of aggression in the coming months to avoid tipping their economies into recession.
How right this hypothesis proves will be the key in determining whether silver’s strong fundamental story can be heard or whether it is once again overwhelmed by hawkish monetary policies.
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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