Silver investors face a nervy wait ahead of the Federal Reserve’s latest interest rate decision later today.
While the metal’s price is finally showing signs of stabilising a little below $19 an ounce, the actions of the US central bank have been the biggest catalyst of silver’s dramatic price plunge since mid-April.
The strong consensus is that the Fed will implement another 75 basis point move to its benchmark rates and given how long this has been the talk of markets, the expectation will be that the reaction to this is already fully priced into silver’s price.
However, with silver more prone to volatility than its golden peer due to its comparatively lower trading volumes, a sharp negative reaction when confirmation hits of another large Fed hike can’t be ruled out.
The hope that silver bulls will cling to is that the metal is already at a considerable discount to its fair value with the recent trading activity pointing to a market having reached its bottom. Furthermore, the fundamental outlook remains supportive with silver a key component of key industrial sectors for the energy transition, notably in photovoltaic cells for solar generation and in batteries for electric vehicles.
The key question will be how far out is the market looking? Could there yet be more short-term pain for silver before that sunnier horizon hoves into view?
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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