Posted 19th October 2022

Silver’s Recovery Pauses as High Inflation Reiterates Need for More Hikes

Silver’s Recovery

Silver has so far failed to climb back above $19 an ounce after the latest comments by a Federal Reserve official that reiterated the need for yet more significant interest rate hikes. 

This hawkish reminder by Neel Kashkari, Minneapolis Fed President, coupled with today’s UK inflation figure coming in above expectations at the highest level in 40 years provided a sufficiently bearish set-up for silver to fail to build on its recent tentative recovery.

Silver finds itself driven by a series of contrasting factors with the greater industrial appeal of silver compared with its precious metal peer gold means it is more exposed to the wider economic outlook. As such, silver was able to gain from a slight improvement in sentiment on equities markets following the reversal by new UK Chancellor, Jeremy Hunt, of much of his predecessor’s economic policy as well as encouraging results from tech giant, Netflix. 

Given silver’s strong fundamental outlook, with demand set to reach a record high this year given its increasing use in sectors such as solar energy and batteries, the metal is well poised for a significant climb upwards but for the time being at least the downward pressure coming from the Fed, and other central banks across the world, continuing to implement large interest rate hikes is keeping silver’s price subdued.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis