Silver’s support above $20 an ounce has broken down with the price slipping back into $19 an ounce territory following hawkish comments by two senior Federal Reserve officials that pointed to more large interest rate hikes still needed by the US central bank to bring inflation back to its 2% target.
This reminder that more increases in benchmark interest rates are still very much needed in the US, despite recent promising economic data out of the country, has brought down silver as its lack of yield makes it less attractive at times of rising interest rates due to its lack of yield.
A hawkish Fed was the catalyst for silver’s multi-month plunge from April through to July but while silver is once again falling, the reaction this time around is likely to be more muted with the price already trading at the lower end of its recent range.
The low reached during that July nadir are likely to prove the bottom for silver and with more support for the metal having built up in recent weeks, investors will be hoping that today’s declines prove temporary and it can at the very least hold on to its current levels if not climb back above $20 in the very near future.
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