Silver is holding above $20 an ounce even with today’s slight dip in the price, once again reaffirming the strength of the support around this key level that the metal has now built up.
A weakening in the US dollar allied to the prospect of the Federal Reserve being less aggressive on its future monetary policy has given silver the breathing space to regain some of the ground it has lost since mid-April, however it remains some way off those levels of a few months ago.
While silver has built up support around $20, the potential for the price to climb significantly higher is capped by two main drivers. The looming likelihood of a recession in Europe has the potential to reduce industrial demand for silver while although the Fed may be less aggressive on future hikes, more interest rate increases are still likely, reducing the appeal of a non-yield bearing asset such as silver.
In this environment, where a lot of price action is based on rhetoric rather than reality, any indicators that give more clarity on the true picture will be closely analysed by traders and investors alike with this week bringing the minutes of the Federal Open Market Committee.
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