Silver has climbed back above the crucial threshold of $20 an ounce that it has been flirting with for much of this week.
This is an important indicator that support remains for the precious metal and will increase optimism among silver investors who are still recovering from a brutal few months.
It is interesting to note that silver has been able to make some gains this week despite the rhetoric over the trajectory of future rate moves by the Federal Reserve remaining very hawkish, with Loretta Mester the latest senior Fed official to chime in with the need for more large rate hikes. It was the Fed’s switch to a hawkish policy earlier in the year that triggered silver’s multi-month price slump so the fact the metal has been able to hold its level and even make tentative gains does emphasise that the bottom was indeed reached in late July.
The deterioration of relations between the world’s two superpowers, the US and China, following House Speaker Nancy Pelosi’s trip to Taiwan has bolstered demand for haven assets such as silver but the metal hasn’t benefited as much as gold, the ultimate haven asset.
With silver now having held above $20 an ounce, investors can look upwards and hope for further recoveries of the price lost in the last few months. How much ground can be recovered will depend on how much the Fed raises interest rates over the coming months with the prices seen in April remaining a long way off for silver still.
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