Silver’s downward trend is continuing, albeit at a much shallower decline than seen last week, with the price now below $22 an ounce.
After spending January drifting sideways, the shock to markets delivered by surprisingly strong US jobs figures caused silver to drop almost $2 an ounce as investors now expect the Federal Reserve to raise interest rates for longer than previously anticipated. As physical silver doesn’t produce a yield, the precious metal finds itself out of favour during periods of rising interest rates, as seen for much of 2022, with other interest-paying assets favoured instead.
Inflation data out of the US will paint a fuller picture on the true state of the world’s largest economy which so far seems to be holding up well in the face of inflation that remains way above the Fed’s 2% target but does now seem to be on a downward trajectory. Silver will be hoping that this week’s data points also come in better than expected to reduce the pressure on the Fed to maintain its policy of rate hikes for as long as traders have now readjusted for and give the precious metal the positive jolt it needs after a disappointing 2023 so far.
The fundamental outlook for silver remains very strong with the metal in strong demand from the industrial sector and supply unable to keep pace. Yet for now, that fundamental case has not been heard with macroeconomic factors dominating trading sentiment instead.
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.
