Silver has finally received the boost its strong fundamental outlook had been demanding with the price surging up towards $25 an ounce after months of directionless trading.
The catalyst for silver’s impressive recent surge has been positive inflation data out of the US that suggests the Federal Reserve’s series of interest rate hikes is finally bearing fruit and bringing inflation back towards the bank’s 2% target.
As such, the markets are now looking ahead to the end of the Fed’s rate hike cycle which could come as early as September based on Governor Christopher Waller’s recent speech. This has given silver a real boost as it was last year’s series of large hikes by the Fed that sent the price tumbling from $26 down to below $19 over a series of months and have held back its recovery since that September nadir too.
Now with the prospect of that macroeconomic headache easing, attention can focus on silver’s outstanding long-term demand outlook with the metal a key part of the energy transition with it used in photovoltaics for solar energy and in batteries for electric vehicles.
Given the sustained supply deficit the metal continues to be in and with a supportive macroeconomic environment, there is little to stop silver climbing considerably higher still with last year’s high above $26 an ounce an obvious first major hurdle to clear.
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