Silver is tracking up towards $20 an ounce after shaking off this week’s large interest rate hikes by both the Federal Reserve and the Bank of England.
Even though both central banks raised their rates by 75 basis points, as both of these were in line with expectations, the impact on silver from these hikes had long since been priced in.
It is interesting to see how the silver price keeps striving to make gains despite the pressure imposed on it from the series of interest rate hikes implemented by the Fed in particular. It was after all the US central bank’s switch to its current aggressive stance that prompted the price of silver to plunge from $26 an ounce to below $18 an ounce over the course of a few months earlier this year.
So the fact that silver has been on an upward trajectory from mid-October onwards points to investors switching their focus away from the short-term impact of rising interest rates and towards a 2023 in which hikes are expected to be both fewer and smaller allied to a strong fundamental outlook for the metal.
Fed Chair Jerome Powell’s comments that followed Wednesday’s interest rate decision didn’t give much away in terms of the US central bank’s determination to keep raising rates to curb inflation so investors will need to be cautious in assuming that 2023 will be as dovish as they perhaps expect. That said, silver looks to be building up a strong bedrock of support so that the moment the Fed lets off the pressure, the price could surge and quickly regain all the ground lost in 2022.
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.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis
