While the dollar looks set to continue its downtrend, it would be fair to say markets remain wary of the US economy, in no small part thanks to questions surrounding current sovereign debt, trade agreements and inflation.
For now, these questions largely remain unanswered. This uncertainty dampens risk appetite, significantly boosting precious metal gains, a phenomenon seen for much of this year.
In the latter case, sticky inflation, at least in a vacuum, is favourable for silver pricing, with many looking to precious metals as a means of hedging inflation. While heightened inflation can sometimes be met with a rate hike, typically silver negative, a struggling labour market will almost certainly force the Fed’s hand in cutting rates this time around.
Coupled with renewed safe-haven flows on general recession fears, at least in the short term, one outcome is a two-sided tailwind helping bolster further precious metal gains – silver included.
