While silver may not have enjoyed the same surge that its precious metal peer, gold, has experienced, it still climbed to its highest level of the year yesterday and continues to trade close to $26 an ounce.
The prospect of the Federal Reserve pausing its cycle of interest rate hikes after its 25 basis point increase earlier this week is the biggest positive driver for silver, as it was the start of this cycle back in April last year that saw the precious metal endure a multi-month slump that it is still recovering from.
Even with silver’s run of gains since March, it has still failed to achieve the high achieved in March last year, even though the fundamental outlook for the metal remains as strong as ever. This reflects the inner caution that remains towards silver as while it does have safe-haven appeal, it also has far more industrial exposure than gold, so the prospect of a global recession would be far more detrimental to silver than gold.
That said, silver draws the bulk of its industrial demand from two sectors that are likely to continue marching on, irrespective of economic concerns, the solar industry and electric vehicles, with the world seeking to transition away from fossil fuel sources in favour of renewable or low-carbon alternatives. As such, with a macroeconomic environment finally looking more favourable for silver, the price has the potential to climb higher still to challenge $30 an ounce before the year’s end.
Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
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