It is interesting to note the contrasting fortunes of silver versus its precious metal peer gold.
Concerns about the health of the US banking sector have seen gold benefit from haven-seeking investors, yet silver, which is also considered a safe haven, hasn’t experienced anything like the positive price reaction of gold and is instead struggling to hold above $20 an ounce.
A similar pattern was on display last year when once silver fell out of favour when the Federal Reserve started to implement its series of interest rate hikes, any macroeconomic release or comment by a Fed official was interpreted negatively for silver and prompted a fresh dip in its price with silver enduring a multi-month slump from April through to September.
This year after enduring a tough February, hopes of a consolidation in March look set to be dashed as investor support for silver looks weak currently. Rising interest rates are an understandable negative for this non-yield-bearing asset yet the fundamental outlook for the metal is more than strong enough to offset that yet for the moment investors aren’t buying into the strength of industrial demand from sectors such as solar and electric vehicles for silver.
For now, if silver can hold above $20 in the short-term then the next Fed decision on interest rates later this month could present an opportunity for the metal to recover some of its losses, assuming the Fed keeps to a 25-basis point hike rather than surprises with an unexpectedly aggressive move.
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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