Silver Plays Catch-Up as Gold Price Hits a Record

Silver was higher on Wednesday ahead of another speech from Fed Chair Jerome Powell. However, there was further patience on interest rates.

Silver – Daily Chart

Silver – Daily Chart 

Silver is approaching the $27 level and could take out the levels ahead of $30. 

Powell reminded investors that the US central bank has time to wait for its first interest rate cut due to economic strength and recent high inflation readings. 

“Recent readings on job gains and inflation have come in higher than expected,” Powell said. However, Recent data do not materially change the overall picture, which continues to be one of solid growth, a strong but rebalancing labour market, and inflation moving down toward 2% on a sometimes bumpy path.” 

“If the economy evolves broadly as we expect,” Powell added, he and his fellow policymakers believe a lower policy interest rate will be required “at some point this year.” 

His comments kept markets on track for rate cuts, but gold has also seen demand from central banks due to a desire to diversify from the US dollar. Ukraine also continues to attack Russian infrastructure, and there is a general mood of shaky geopolitics. 

However, analysts at ING said that ETF holdings in gold do not align with the sharp price rally in March. ETF holdings continue to decline, currently at 82moz, down from 85.6moz earlier in the year. “There is plenty of room for investors to buy the gold market, but maybe we need to wait for the Fed to actually start cutting rates,” they said. 

Markets will focus on the US jobs number on Friday, where a substantial number could hurt gold. Silver has hit a two-year high recently and will also take its direction from gold and the jobs number on Friday.

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