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

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.

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 greenwash while investing sustainably.

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