A weaker US dollar has helped keep gold and silver prices high in the past few weeks. Despite calmer markets following the recent banking crisis, gold and silver have maintained recent highs thanks to the falling value of the dollar.

Gold has once again passed $2,000 per ounce this week as markets reopened after the Easter weekend and is now up more than 7.5% in the past month in USD. Silver has performed even better passing $25 per ounce for the first time in a year and gaining more than 22% in the same four-week period.

120423 Silver Chart

Silver has been the best performing precious metal in the past four weeks, with impressive gains.

Although further bank collapses could happen, markets seem reassured that the contagion has been contained, and have once more returned to the inflation and interest rate narrative that has been dominating financial analysis for well over a year now. After months of hikes, expectations suggest that rates have peaked, or may even begin to be cut soon.

Inflation looks to be on the way down for the US, with the latest figure released this afternoon showing an annual rate of 5% just below the expected 5.1%. This is down from 6% last month, and continues a trend seen in most major economies around the world, taking the US inflation rate to its lowest since May 2021. Easing supply chain pressures and lower energy costs have helped reduce the rate at which prices are rising, though it remains to be seen how quickly they will fall to the target of 2%.

With inflation falling, central banks are expected to bring interest rates down, with the IMF yesterday forecasting a return to pre-pandemic rate levels. The Federal Reserve have already begun to slow the pace of their hikes, and many investors will be waiting to see what happens at their next FOMC meeting in May.

For now, markets seem to be betting on a pause to any more hikes, and cuts to follow in the coming months. This has pushed the US dollar index down roughly 2% in the past month and could gain further traction if the Fed do pause their rate hikes in May. The dollar has also suffered a concerted effort by other countries to move away from the US as the dominant currency. Russia, China, and many other countries have struck deals in recent weeks to complete trades for commodities like oil without the use of dollars.

Whether its lower interest rates or de-dollarisation, any further weakness for USD will only continue to benefit gold and silver. Gold is just $50 from the all-time high in the US and seems well poised to set a new record in 2023. Silver is still a long way from its all-time high of $48 in 2011 but low supply and high demand continues to drive the price of the alternative metal, and the past months gains have certainly been impressive.