Posted 25th abril 2022

Silver Continues to Fall as Investors Punish Its Lack of Yield in Time of Rising Interest Rates

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Silver is struggling to find a footing currently as after failing to hold on to $25 an ounce last week it now finds itself below $24 an ounce at its lowest level since February.

The prospect of a series of interest rate hikes by the Federal Reserve has placed non-yield bearing assets such as silver under pressure with this significant bearish factor outweighing a series of potentially bullish factors for the precious metal.

The Fed is expected to raise interest rates in each of the next three months which has strengthened the dollar and pulled down assets, such as silver, that are priced in the US currency. 

Live Silver Price Chart – $/oz

Silver seems to have been meted out considerable punishment by traders currently for its lack of yield in an environment where interest rates are set to rise as from a fundamental perspective the case for silver still looks strong.

Industrial demand for the metal is set to rise this year, particularly from the renewable energy sector where silver is a crucial element in photovoltaic cells used in solar panels, while with inflation proving a lasting concern, silver gains attraction as an asset that can hold its value over time. 

Yet for the short-term at least, the behemoths of the Fed’s actions and the reduced growth outlook for China, the world’s biggest economy, as it continues to be plagued by lockdowns, is outweighing silver’s medium-term attractions. As such, these recent losses could offer bullish investors a chance to bolster silver positions at lower prices. 

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