The gold and silver price charts of the last few days look remarkably similar, illustrating clearly the close correlation the two precious metals typically have. So while gold has slipped below $2,000 an ounce, silver has fallen below $26 an ounce.
Silver has been pulled down by expectations that the Federal Reserve will raise its interest rate later this week, marking the start of a more hawkish policy to tackle runaway inflation.
But while silver has been moving in lockstep with gold in recent days, it will be interesting to see its trajectory over the coming weeks and months as its more industrial use than gold could see that correlation break down.
Russia’s invasion of Ukraine saw a flight to haven assets for investors, benefiting both gold and silver alike. However, while those price surges look to have stalled as investors remember that central banks are keen to raise interest rates this year, making the non-yield bearing metals less attractive.
Yet silver could see renewed interest as firstly commodities are good hedges against inflation, so the highly inflationary environment the world finds itself in is likely to see more money flow towards an already engorged commodities sector.
Secondly, silver’s use in photovoltaics could see demand surge as countries rush to increase their energy independence and speed up the rollout of solar and other renewable energy sources to wean themselves off fossil fuels, particularly those from Russia.
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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.