Silver is holding above the crucial threshold of $20 an ounce, underlying the metal is creeping back in favour among investors after spectacularly losing support over the previous three months.
Strong jobs data can be interpreted in two contrasting ways for silver. The metal’s use in a range of industries, including in electric vehicles, mean that signs of a strong US economy are positive for silver demand.
Equally, the robustness of the US economy gives the Federal Reserve greater confidence to implement the series of interest rate hikes it is planning, which would be a negative for silver as rising interest rates reduce the investor appeal of the non-yield-bearing metal.
The fact that silver remains above $20 despite the increasing likelihood of upcoming large interest rate hikes by the Fed points to the slight shift in the narrative surrounding the metal. With the bottom reached in July, the fundamental outlook which has this year being a record year demand-wise has been allowed to reenter investors’ thoughts.
How much ground silver can recover is likely to be capped by the aggression of the Fed but investors will be anticipating that silver can continue to trade in the $20s with this slightly more optimistic medium-term outlook.
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.