Silver Price News: Silver Out of Favour in Face of High Interest Rates

Silver’s fall out of favour among investors has seen the price continue to fall with the metal trading below $23 an ounce and heading down towards $22 and the lowest levels since March.

A macroeconomic setting in which global interest rates are high and set to climb higher still is presenting a challenging environment for silver in spite of the metal’s strong fundamental outlook. 

While investors are starting to look ahead to when the Federal Reserve may start cutting interest rates, with Goldman Sachs pencilling cuts to start in June next year, the present-day realities are of rates at around 5%. This is reducing the appeal of physical silver with the asset not providing investors with a yield and seeing other interest-bearing assets, such as bonds, favoured instead.

Yet throughout silver’s August slump the fundamental outlook for the metal remains as strong as ever, driven by the need for countries around the world to decarbonise. Given the vast amounts of solar energy that will need to be generated in the coming years and the significant quantity of silver required in each photovoltaic cell, a forward-looking and brave investor may view silver’s fall from favour as the ideal opportunity to top up holdings with the metal’s long-term potential to trade closer to $30 an ounce rather than $20.