Silver prices have fallen for a fourth consecutive week, even as central banks have begun to reduce their rate hike plans.
Silver XAGUSD – Weekly Chart
Silver prices are currently testing the uptrend support line at $23. If the price breaks below this line, there is further support at $22.
Another problem for bullion investors is that inflation has fallen in developed countries. Many investors bought precious metals as a hedge against inflation, but the peak in inflation, which was close to double digits in many countries, has plateaued.
The annual inflation rate in the United States increased to 3.2% from 3%, but core inflation fell to 4.7%. Analysts still believe the Federal Reserve has a long way to go, but at 3.2%, inflation is only 1.2% away from the central bank’s 2% target.
Karl Schamotta of Corpay wrote that markets are increasing their bets on a “soft landing” this morning after US consumer inflation slowed as expected, reducing the need for further monetary tightening from the Federal Reserve.
Further data released on Thursday showed that the number of people filing for state unemployment benefits increased by 21,000 to a seasonally adjusted 248,000 for the week. This was higher than the 230,000 claims that economists had forecast, and is a sign that the booming jobs market is starting to slow down.
The markets are now expecting the Federal Reserve to pause its rate hikes in September, and they may even be done raising rates altogether.
The silver market has been in deficit for the last two years, with the World Silver Survey 2023 forecasting a deficit of 142.1 million ounces in 2023. This is due to beneficial dynamics for silver supply, such as increased demand from investors and industrial users.
Analysts believe that the demand for solar panels and electric vehicles will continue to grow as governments drive towards green energy policies.