Silver has had a startling fall from grace among investors and now finds itself struggling to hold above $22 an ounce.
It was only a matter of weeks ago that the metal was trading comfortably above $25 an ounce, with that level proving an important support. However, once that support fell away, the price has failed to find any support at lower levels and is now trading close to its lowest point of the year.
Live Silver Price – $/oz
The latest driver for silver’s decline is the strength of the dollar which has put pressure on all assets priced in the US currency. Furthermore, the reason for the dollar’s strength, the Federal Reserve’s planned series of interest rate hikes, is also a negative factor for silver as the appeal of the precious metal starts to dwindle when rates rise as its lack of yield makes other assets such as interest-paying bonds more attractive.
It will be interesting to note the price reaction if and when silver does drop below $22 an ounce as this psychological threshold should surely finally provide support with investors taking the opportunity to buy into the metal’s depressed valuation.
As has been mentioned on a number of occasions in this commentary, the fundamental case for silver remains strong with the industrial demand for the metal for the burgeoning solar energy industry presenting a particularly strong long-term outlook. Surely silver’s slide can’t continue for much longer.
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 greenwashing while investing sustainably.
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