Silver endured choppy trading yesterday but heads into Friday down 2.5% for the week at $22.6 per ounce.
Rising rates are presenting an increasingly challenging hurdle, while growth prospects still appear mixed.
Incoming economic data continues to paint a decidedly mixed outlook for growth. This week Chinese retail sales have disappointed, but US retail sales were stronger than expected. Japan’s economic growth has exceeded expectations, but Germany’s economic sentiment unexpectedly dipped. On balance, however, the data suggests some loss of economic momentum across most regions.
Despite this, central banks have continued to strike a hawkish note, most recently in a speech delivered yesterday by Fed Chair Jerome Powell. In his view, the US economy, although slowing, remains resilient and inflation, while falling, is viewed as being somewhat sticky. Given that Powell is a centrist among FOMC voters, the bottom line still seems to be that the Fed is unwilling to discount the possibility that the next move in rates might be up, rather than down.
Unsurprisingly, bond markets have reacted by pushing yields higher once more after the decline seen last week, while the dollar has firmed. Physical silver funds – widely viewed as representing marginal investors – have continued to see net outflows during the week and the latest available data suggests that holdings now sit at a two-month low.
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