Silver continues to slide without a clear support to cling onto with the price now down to around $21.50 an ounce, its lowest level in two and a half months.
The prospect of the Federal Reserve, and indeed other central banks around the world, continuing to increase their benchmark interest rates for longer than previously anticipated to combat stubbornly high inflation has seen silver punished for its lack of yield.
This same dynamic played out for much of 2022 when the Fed initially announced its switch to a more aggressive monetary policy, which prompted silver to endure a multi-month slump from April to September. When the market started to reassess how much longer the Fed was likely to continue hiking rates, silver was able to recover over the last quarter of 2022 before largely treading water over January.
February’s disappointing performance is a reminder of how prone to the actions of the Fed silver remains as this has once again driven its price, rather than the metal’s strong fundamental outlook that should see the price be significantly higher than where it is currently trading. For a bold investor, this month’s declines represent an ideal buying opportunity but right now the short-term outlook sees more losses before the market is willing to hear silver’s resounding fundamental case once again.
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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