Silver’s brief recovery has stalled again ahead of a busy day of central bankers speaking at their forum in Portugal with the market now expecting more interest rate hikes both in the US and Europe.
Silver has found itself stuck between a rock and a hard place as investors try to decide the true health of the global economy. On the one hand, there is the school of thought that these continued rate hikes will tip countries into recession, which would potentially be detrimental for silver’s industrial demand. On the other hand, silver is a haven asset that could be attractive while the global economy is under pressure.
So far, the global economy, particularly the US, has held up better than expected and given central banks more room for further interest rate increases, a scenario that is detrimental to silver due to its lack of yield. As such silver has struggled to gain much traction and is currently shuffling around below $23 an ounce.
Taking all factors into consideration, silver still feels undervalued as the metal is likely to be in demand even during a recession as its key role within the energy transition means that the need for silver will continue as countries strive to meet their long-term climate goals. However, while the long-term prospects for silver remain shiny, a period of sideways drift remains likeliest in the short-term.
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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