Silver Finally Finds Respite as Price Rises From 2020 Lows Ahead of US Inflation Data

Silver is finally receiving some respite from traders after being punished by seemingly every macroeconomic and geopolitical indicator since the middle of May.

Having sunk from comfortably above $25 an ounce to just above $21 an ounce in less than a month, the price has perked back up to $21.60 an ounce in early Wednesday trading.

Today’s buying interest is a reflection of how undervalued silver has become, having sunk to levels not seen since July 2020. How far these initial gains can extend will likely be determined by the market’s reaction to the US inflation figure due out later today.

Live Silver Price – $/oz

Expectations are that inflation in April will come in slightly lower than March’s figure but still above 8%, a very high level historically and well above the Federal Reserve’s 2% target.

In this inflationary environment, the Fed has been forced to implement a series of interest rate hikes and reduce its balance sheet, reducing the appeal of non-yield bearing assets like silver.

Yet with the fundamental case for silver still strong, investors are starting to realise that silver still has an attractive investment case as a key material for the burgeoning solar energy sector, a potential hedge against inflation as well as a defensive asset to hold in case of any escalation of the war in Ukraine. In this context, a quick recovery back above $22 an ounce and onwards is highly possible.

Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News. 

As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwashing while investing sustainably.

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