Silver’s good recent run continues with the metal now above $19 an ounce even as both the European Central Bank and the Federal Reserve look set on a series of significant rate hikes in the coming months.
The fact that silver has been able to make these recent gains – even though the macroeconomic picture remains very hawkish – suggests that the precious metal had been oversold and overly punished by the prospect of ever-rising interest rates with traders now buying silver with the asset seen to be considerably below its fair value.
Silver’s recovery back above $19 an ounce will be of relief to investors, but the metal still remains considerably below where it was trading just a few months ago and the current levels still put it at the bottom end of its trading range of the last two years.
Positive news out of Ukraine, where the home forces have pushed back against the invading Russians, has also lifted markets with silver gaining a slight boost given its industrial exposure.
How long this recent tentative recovery can continue will largely depend on the actions of central banks in the coming weeks and months.
With an aggressive policy now priced in, any relenting by central banks will give silver a boost. But assuming large rate increases are indeed implemented, then it is hard to see silver climbing significantly above $20 an ounce.
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.