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.
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.