The price of silver has fallen for a fourth consecutive week even as central banks pull back on their rate hike policies.
Silver XAGUSD – Weekly Chart
The silver price is testing an uptrend support line at $23.00, and there is further support at the $22.00 level.
Another problem for bullion investors is the drop in inflation seen across developed nations. Many investors were buying precious metals to hedge against inflation, but the peak in inflation near double digits for many countries has stalled.
The United States saw a seasonal tick higher to 3.2% from 3% in its annual inflation rate, but core inflation fell to 4.7%. Analysts are still discussing a long way to go for the Federal Reserve, but at 3.2%, inflation is only 1.2% away from the central bank’s 2% target.
“Markets are doubling down on ‘soft landing’ bets this morning after US consumer inflation slowed as expected, reducing the need for further monetary tightening from the Federal Reserve,” wrote Karl Schamotta at Corpay.
Further data on Thursday showed claims for state unemployment benefits increased by 21,000 to a seasonally adjusted 248,000 for the week. Economists had forecast 230,000 claims for the latest week, a sign that the booming jobs market is stalling.
Markets are now pricing a high chance of a Fed rate hike pause again in September, but they may be done with their hiking policy.
There are still beneficial dynamics for silver supply, with the World Silver Survey 2023 saying the silver market has been in deficit for the last two years. The deficit in 2022 was 237.7 million ounces, while the 2023 deficit is forecast to be 142.1 million ounces.
Analysts believe that will continue with the drive to green energy policies and the need for solar panels and electric vehicles.
