Silver News

Silver below $25 on Ukraine-Russia peace hopes

Most commodities had a negative performance last week. WTI and Brent, the two main benchmarks for the oil price, were particularly under pressure and lost around 14-15%. Wheat also posted a double-digit decline. The scenario in Ukraine remains extremely complicated. Investors seem to be a bit more optimistic about the possibility that some sort of agreement might be found in the next few weeks, which has pulled down the price of most commodities. Also, expectations are growing that the Federal Reserve will become more hawkish in the next few months, in an effort to deal with rampant inflation. According to the CME FedWatch Tool, over 70% of investors forecast a 50 basis points rise in interest rates in May, and see rates reaching 2.50% by the end of 2022.Although the new week started with a modest rebound for silver, the spot price is still just below the $25/oz mark as uncertainty is still dominant. Silver ($/oz) Chart - from Kinesis Exchange From a technical point of view, a decline below $24.6 would represent a negative signal, while a recovery above $25.2 could trigger momentum, increasing the chances of further recoveries. The gold/silver ratio posted a modest increase to 78 last week, showing some weakness for silver versus the yellow metal. The evolution of the situation in Ukraine and U.S. monetary policy is likely to remain the main market drivers for the price of silver. Find out more about what Kinesis has to offer Learn More Carlo Alberto De Casa is an external Market Analyst for Kinesis Money. He also writes as a technical analyst for the Italian newspaper La Stampa. Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018. This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.

Carlo Alberto De Casa
Carlo Alberto De Casa

04/04/2022

Gold & Silver April Outlook - Monthly Review - 2022

April 2022 – A Look Ahead Developments in Ukraine will remain a key driver of markets in April after a month as dramatic and disconcerting as March. While the fact both sides are engaging in peace talks has to be a good sign, there remains a general uneasiness about Russia’s willingness to stay true to any agreement that may be brokered. At the time of writing, Russia was set to move its troops away from the Ukrainian capital of Kyiv, where they have struggled to make much headway in the face of fierce Ukrainian resistance, and redeploy them in the Donbas region. Russian units are “not withdrawing but repositioning,” as NATO Secretary-General Jens Stoltenberg described it. While the conflict continues to rage, both gold and silver are set to be supported by safe-haven demand. However, with the bulk of the fear trading now priced in, it will take a severe escalation in the violence or the scope of the conflict, perhaps with more countries dragged in, to increase this existing source of demand. On the flip side, any sign of progress in peace talks will see gold and silver come under pressure. Central Banks Take Action The other main driver in April will be the actions of central banks. Any additional increases in interest rates will reduce the appeal of gold and silver for those investors preferring a dividend or yield-bearing asset instead. Inflation figures will also be closely watched to see if there is any sign of the rising costs of living easing. Prior to the conflict in Ukraine, the expectation was that inflation would peak in April but that now seems overly optimistic. Of course, inflation isn’t necessarily all doom and gloom for gold and silver as while central banks hiking rates in reaction is typically a drag for the precious metals, gold and silver are both considered good hedges against inflation as assets that have retained their buying power over centuries. Will Gold & Silver Break Close Correlation? A key development to look out for in April is signs of gold and silver breaking out of their close correlation. While gold looks to have more headwinds than tailwinds to push its price, silver’s more industrial appeal provides it with strong fundamental support, outside of purely geopolitical and macroeconomic factors. Indeed the Silver Institute is forecasting demand for the metal to reach a new record high this year at 1.112 billion ounces. A major source of this burgeoning demand comes from the solar sector, something that is only likely to gain pace as European countries seek to reduce their exposure to Russian fossil fuels. “The outlook for silver’s use in the photovoltaic (PV) industry remains bright,” the Silver Institute said. “Government commitments to carbon neutrality have resulted in a rapid expansion of green energy projects. As a result, even with ongoing efforts to reduce silver loadings, record PV installations are expected to lift silver demand in this segment to an all-time high in 2022.” Silver Supply & Demand Source: The Silver Institute, Metals Focus So while gold can be expected to trade either side of $1,900 an ounce in April, silver has the scope to break out higher. Already the strength of investor support has been shown by how quickly the price has recovered back above $25 an ounce on the five recent occasions it has dipped below that threshold. With $25 as strong support, silver can look upward with the potential to once again test levels not seen since the short-squeeze of 2021. Silver price in March 2022 - 1 hour interval - $/oz chart from Kinesis Exchange Macros & Markets March has been dominated by the dreadful events in Ukraine following Russia’s invasion at the end of February. For the first time since the end of World War II, there is an armed conflict in Europe, resulting in the death of thousands of civilians and soldiers with millions of Ukrainians forced to flee their country and seek refuge elsewhere. Our thoughts and sympathies are with all those people caught up in this war. While our primary concern is with the human suffering caused by the conflict, there is inevitably an economic impact too. In the days and weeks immediately following Russian troops crossing the Ukrainian border, equity markets tumbled with the S&P 500 Index falling to its lowest since June 2021 while the FTSE-100 Index slumped to a five-month low as traders and investors sold out of risk assets in favour of safe havens, including gold and silver. This rush to gold saw its price top $2,000 an ounce for the first time since August 2020 and went close to challenging its all-time record high before topping out just above $2,050 an ounce. Silver also surged close to $27 an ounce, its highest since last year’s well-documented short squeeze. The war in Ukraine has also exacerbated an already highly inflationary environment with Russia and Ukraine's vast supplies of a host of grains, metals and energy likely to be highly constrained for a number of months. In particular, European countries are now rushing to wean themselves off Russian oil and gas as soon as possible with this sudden reduction in available supply from the world’s second-largest oil producer pushing the price of Brent crude close to $130 a barrel. Gold price in March 2022 - 1 hour interval - $/g chart from Kinesis Exchange Rate Hikes In response to inflation levels at multi-decade highs, central banks across the world are now expected to implement a series of interest rate hikes over the course of this year. Already the Bank of England and the Federal Reserve have raised rates with the European Central Bank expected to follow shortly. This might be a headwind for gold and silver, as these non-yield-bearing assets are less attractive in an environment of rising interest rates. However, another implication of Russia’s invasion of Ukraine has been the collapse of the value of the rouble in the face of a series of ever-broader economic sanctions being imposed on Russia and its leading figures. The appeal of gold as an inflation hedge is growing, especially for investors holding roubles and other more volatile currencies, who want to protect themselves from their devaluation and volatility. Russia’s Gold Reserves Russia has long since viewed the hegemony over the US Dollar as the currency of the world with disdain and has been building up its gold reserves considerably in recent years. The country now has the fifth largest gold holdings in the world with just under 2,300 tons, according to the latest figures from the World Gold Council. However, this strategy of bolstering its gold reserves to reduce Russia’s dependency on the US Dollar in the event of a crisis such as the self-inflicted one the country now finds itself in has floundered after the US Treasury banned its citizens and institutions from engaging with any gold-related activity with Russia, with the UK swiftly following suit. Russia’s gold and silver refiners had already found themselves banned from the LBMA’s Good Delivery list meaning any new bars they produce cannot be sold on London’s bullion market nor in the US after a similar suspension by the CME Group. Inside Russia, the collapse of the rouble saw citizens rush to buy gold in such volume that the country’s central bank was forced to halt its purchases from local banks. Although the central bank resumed activities before the end of the month, it will now pay a fixed price of 5,000 roubles per gram between March 28 and June 30, considerably below where the market is currently pricing. Find out more about what Kinesis has to offer Learn More 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 renewableenergy 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.

Rupert Rowling
Rupert Rowling

01/04/2022

Silver Struggles to Regain $25 Territory As Hopes of Peace in Ukraine Reduce Haven Appeal

After successfully rallying back above $25 an ounce on the four recent previous occasions that silver fell below this threshold, its fifth decline is proving harder to rebound from. The main pressure comes from the continuation of talks between Ukraine and Russia aiding hopes that peace can be achieved and a swift end brought to the fighting that has now been going on for over a month. Add in the prospect of rising interest rates in the US and Europe and silver currently has two significant bearish factors pulling its price down. Silver ($/oz) chart - 15 minutes - from Kinesis Exchange Yet despite its recent declines, silver remains at a level far above where it was trading for the majority of the second half of 2021. As the fear trading that followed Russia’s invasion of Ukraine starts to unwind, haven assets like silver have lost some of their appeal. However, with the war far from over, any escalation in fighting or failures in peace talks could quickly see a renewed rush to safe havens as market confidence remains fragile. So far, silver has traded in close correlation with gold and has been pulled up and down by the same factors. But should greater focus be placed on silver’s industrial appeal and the forecast for record demand this year, then silver could break away and climb while gold treads water. Find out more about what Kinesis has to offer Learn More 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 inwriting 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 renewableenergy and the challenges of avoiding greenwash while investing sustainably.

Rupert Rowling
Rupert Rowling

01/04/2022

Silver Battles to Climb Above $25 Once Again Illustrating Underlying Strength of Support

Silver has once again strived to climb above $25 an ounce after briefly dipping below that threshold. This is now the fifth time this month that silver has dropped below $25 and on each previous occasion, it has quickly rebounded, illustrating the strength of investor support at this level. The peace talks in Ukraine are the main driver for markets currently with any signs of potential breakthrough met with a rise on equities and a decline in haven assets such as silver, while any sign of them breaking down or an escalation in violence provides a boost for gold and silver at the expense of equities. Silver ($/oz) chart - 15 minutes - from Kinesis Exchange As long as the war in Ukraine continues silver is likely to remain well supported but even if a peaceful resolution can be found in the coming weeks, which seems overly optimistic at this point, silver’s medium to long term prospects remains strong. Demand for the metal is likely to increase as countries ramp up their adoption of solar energy, which uses silver in its photovoltaic cells, as they strive to meet net-zero goals and end their dependency on fossil fuels, particularly those sourced from Russia. Furthermore, the current macroeconomic environment where inflation is at multi-decade highs in many countries broadens silver’s appeal as a hedge against rising prices. The only significant headwind for silver is the forecast interest rate hikes by central banks to tackle inflation, which reduces the appeal of non-yield bearing assets like silver. Find out more about what Kinesis has to offer Learn More 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 inwriting 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 renewableenergy and the challenges of avoiding greenwash while investing sustainably.

Rupert Rowling
Rupert Rowling

30/03/2022

Silver Drops Back to $25 But Underlying Support Should See It Gain Again Shortly

Silver, like gold, has been pulled down by a slight increase in risk appetite following words from Ukrainian President Volodymyr Zelensky that he is willing to consider neutral status for Ukraine in upcoming talks with his Russian counterparts. Hope that peace can be achieved in the coming weeks has seen equities gain and haven assets such as silver decline. Added to that, a stronger dollar has also added pressure to dollar-priced assets with silver now trading just above $25 an ounce.  Silver ($/oz) chart - 15-minutes - from Kinesis Exchange It will be interesting to see silver’s reaction if it does fall through the $25 threshold as on the three previous occasions it has dipped below recently, the price has quickly rebounded back above $25. Fundamentally, the outlook for silver remains encouraging with industrial demand set to be strong, particularly for photovoltaic cells, while rising inflation is another source of strength with silver considered a hedge against rising prices.  These bullish factors outweigh the headwinds provided by rising interest rates and a slight reduction in fear trading and should see silver climb again soon. Find out more about what Kinesis has to offer Learn More 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 inwriting 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 renewableenergy and the challenges of avoiding greenwash while investing sustainably.

Rupert Rowling
Rupert Rowling

28/03/2022

Silver’s Strong Underpinning Sees Investors Looking Upward to See How High It Can Climb

Silver has continued to track steadily higher to now be trading well above $25 an ounce to now be nearing $26 an ounce. Prior to silver’s surge earlier in the month, the precious metal hadn’t broken through $26 since the summer of 2021, so its latest gains come from an already elevated base and illustrate the strength of investor support for silver. Silver is benefiting from its appeal as a haven asset as well as a proven store of value over time in the wake of the war in Ukraine and fast-rising inflation globally. How much higher silver can climb, and whether it can surpass the highs achieved a few weeks ago will be determined by the approach by central banks to tackle rising inflation.  Silver ($/oz) Chart - 15 minutes - from Kinesis Exchange The Federal Reserve and the Bank of England have already initiated their strategy of increasing interest rates with a series of further hikes forecast over the course of the year. This is likely to reduce the appeal for non-yield bearing assets such as silver and gold and cap how high silver can go. That said, silver’s fundamental outlook remains bullish with the metal already illustrating there is strong support underpinning it with how quickly it has rebounded back above $25 an ounce on the three occasions it recently dipped below that threshold. So with $25 providing a strong support, silver investors will be looking at upward resistances rather than worrying about how far it might fall. Find out more about what Kinesis has to offer Learn More 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 inwriting 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 renewableenergy and the challenges of avoiding greenwash while investing sustainably.

Rupert Rowling
Rupert Rowling

25/03/2022