Silver prices made further gains Tuesday, rising to $25.00 an ounce – their highest level since September 1st.
The latest increase took prices to a three-month high, with the uplift coming against a backdrop of rising gold prices, which hit a seven-month high Tuesday.
A further drop in the value of the US dollar gave a lift to dollar-denominated assets like gold and silver, with the US currency having shown a sharp drop against other major currencies through much of November.
The weaker dollar came in response to recent speeches by US Fed officials which gave further weight to expectations that the Federal Reserve has not only concluded its cycle of interest rate hikes but may slash rates as early as spring 2024. Such a scenario would be expected to provide support for precious metals as it would reduce the opportunity cost of holding non-interest-bearing assets.
It remains to be seen whether the recent uptick in silver prices can hold. On the fundamentals side, total global demand for silver is expected to fall by 10% in 2023 vs 2022, according to an update by the Silver Institute released in November. The figure includes a forecast 8% increase in industrial demand which will be more than eclipsed by falling demand in every other sector this year, it said.
However, this comes in the context of record high demand in 2022, and the institute’s forecast still shows a structural supply deficit for silver in 2023 for a third straight year.
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