Silver rallies to eight-week high amid positive outlook

Silver prices rallied in European trade to eight-week highs as the dollar lost ground with increasing speculation about a US rate cut later this year, while Chinese demand continues to improve. 

The gains came amid positive outlook for a stronger advance towards the pivotal resistance of $24.50 an ounce amid increasing retail demand. 

Silver Prices

Silver prices rose 1.8% to $23.75 an ounce, the highest since February 2, after rising 0.1% yesterday, the second profit in a row. 

The Greenback

The dollar index fell 0.3% on Thursday, resuming losses and hitting week lows against a basket of major rivals, in turn underpinning dollar-denominated commodities. 

The decline comes as investments in the greenback slow down with risk appetite rebounding while investors seek fresh opportunities with better investing yield. 

Now investors await crucial US growth and unemployment claims data later today to decide the path forward for the dollar. 

The Fed

After the recent US banking crisis, markets are leaning towards a potential Fed rate cut later this year, which will be bolstered if inflation data showed further slowdown.

Markets now view the US economy as in real danger of a steep recession, in turn underpinning safe havens such as precious metals. 

Chinese Demand

Recent Chinese data showed strong recovery after ending the zero tolerance Covid 19 policies and reopening the economy, in turn boosting demand on metals. 

Index Funds

Amid uncertainty, demand climbs on funds based on precious metals such as silver, which is happening now amidst  the global banking crisis.

Purchases in such funds spur demand on actual silver to cover such increases in fund shares. 

Estimstes

We here expect silver to continue moving in the positive direction towards $24, then the pivotal resistance of $24.5, with a breach sending prices towards $26.