Silver prices gained around 1% on Tuesday as the markets bounced back from a sharp price drop on Monday.
Silver prices rose to around $22.40 an ounce by late Tuesday afternoon, compared with around $22.10 an ounce late Monday. Prices fell as low as $21.94 an ounce intra-day Monday – their lowest since mid-November, and the drop may have attracted some bargain hunting which helped to power Tuesday’s gains.
However, a surge in the US dollar against other major currencies on Tuesday could put silver back under downward pressure in the short term, as it makes the metal relatively more expensive for buyers in other currencies.
Looking ahead, Wednesday will see the release of Euro Area HCOB Manufacturing PMI figures for January, for the latest health check on the manufacturing sector in one of the world’s largest industrial consumers of silver. UK CBI Industrial Trends Orders for January are also due out the same day. Recent industrial conditions in Europe have been tepid, and the markets will be watching out for signs of any recovery in manufacturing.
Attention will also focus on the macroeconomic front, with Thursday’s ECB interest rate decision and the release of monthly US Durable Goods Orders and Q4 GDP growth rates figures. Recent signs of relative economic strength have seen the markets dialling back expectations of an interest rate cut by the US Fed in March. A longer period of higher rates would ultimately create headwinds for precious metals, while cuts would be expected to support prices.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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