Silver holds above $19 per ounce as support remains despite high inflation

Silver has been under the spotlight in the last few days, showing an interesting signal of recovery.

Earlier this week, silver gained in conjunction with the rebound of stock markets and with the retreat of the U.S. Dollar, after months of strength. From the bottom reached at the beginning of September, in the region of $17.50 per ounce, silver rallied by almost 15% to close in on the $20 mark.

This trend was interrupted yesterday by U.S. inflation data, which once again came in above forecast. Energy is still 24% higher than a year ago (declining from the July figure, which stood at a record level of +32.9%), while food is growing by 11.4% YoY, the largest increase since 1979.

Therefore, it is not a surprise that the current level of inflation is still pushing investors to bet on a hawkish Federal Reserve. An increase of another 75 basis points (from 2.5% to 3.25%) seems now certain, while markets are starting to price in the potential of a 1% increase.

This scenario generated a correction in silver prices, which retreated to $19.20, before correcting to $19.30. Silver has now built a support zone at $19.20, and as long it can remain above this zone, we can expect further recoveries. Vice versa, the next bearish targets are placed at $18.90 and $18.60.

Carlo Alberto De Casa is an external Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. Carlo provides regular commentary for UK notable outlets including the BBC, Telegraph, The Independent, Bloomberg, FX Empire and Reuters.

With a credential background in Economic Finance and International Exchange (MA), his critical analysis on gold and silver’s markets performance is frequently quoted by leading publications, week-on-week.

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