Silver prices hold steady as interest rate hike fears ease
Silver prices have remained robust in trading this week as investors believe that the US Federal Reserve’s inflation fight is coming to an end.
The precious metal was trading at $24.93 per ounce this morning, dipping only slightly from the highs touched at the end of last week.
This comes after encouraging inflation data from the US raised hopes the central bank will only raise interest rates one more time this year, which is currently set at 5-5.25 per cent after chair Jerome Powell signed off on 10 interest rate hikes since March 2022 .
The easing of interest rate hikes, which typically weigh down precious metals as it makes stocks and government bonds more attractive to investors, has enabled prices to be powered by strong fundamentals.
Silver demand has outstripped supply since 2019, which has only been exacerbated by its role in future-facing technologies.
It is a significant material in solar panels, with companies turning silver into a paste which later is used for contact strips as an electrically conductive material.
Electric cars also depend heavily on silver, with most vehicle batteries containing between 25 and 50 grams of silver.
Rupert Rowling, market analyst at Kinesis Money, said: “For now, silver is enjoying a positive run with the high of last year above $26 an ounce a major resistance hurdle to clear. The recent past has given plenty of false dawns for silver investors so holders will be fearful of how lasting the recent recovery proves until the reaction to the Fed’s interest rate decision is known.
“Assuming the rate hike is taken in silver’s stride, then the price can continue pushing on above $25 and achieve a fresh high for the year.”
This comes as gold prices are also enjoying a resurgence, with the precious metal was trading at $1,961 per ounce this morning – rising nearly $15 per ounce this week.