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Silver Slips Below $20 on Prospect of Further Large Hikes Needed by Federal Reserve

Silver has slipped below $20 an ounce as recent comments by senior Federal Reserve officials pointed towards further large interest rate hikes needed to tame inflation, forcing a reassessment of the snap reaction to the Fed’s July interest rate decision that was deemed to suggest a less aggressive path.  The psychological aspect of trading, which is more important to silver than gold given its popularity among retail investors and smaller overall market size, mean that silver investors will want to see the precious metal’s price quickly climb back above the key threshold of $20 an ounce to ensure the tentative return of interest in silver doesn’t immediately evaporate. Silver hasn’t benefited from the increased demand for safe-haven assets following an escalation in political tensions between the US and China in the wake of House Speaker Nancy Pelosi’s visit to Taiwan. This is an illustration of the tough time silver has had in 2022 where it has felt the full weight of any negative macro driver, such as rising interest rates, but hasn’t received the equivalent boost from potentially positive drivers such as rising inflation or safe haven demand. That said, silver’s moves in late July pointed to a market that had finally found its bottom after a brutal few months so today’s dip can be interpreted as a backward step on an otherwise upward trajectory given the strong fundamental outlook for the metal. 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 inwriting 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 renewableenergy 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.

Rupert Rowling
Rupert Rowling

03/08/2022

Gold & Silver August Outlook - Monthly Review - 2022

Gold Outlook for August Gold enters August on an optimistic note with the rhetoric surrounding the Federal Reserve’s latest interest rate decision pointing toward a less aggressive rate hike trajectory in the following months by the US central bank. The Race to Curb Inflation Gold investors will be hoping that the gold price continues the path it was plotting out at the end of July, that after a challenging month in which the precious metal dropped more than $100 an ounce, it is recovering some of those losses with it trading around $1,760 an ounce. Markets are now entering a tipping point where the actions of central banks across the world to tame inflation, namely increasing interest rates, are showing tentative signs of cooling down the pace of consumer price increases yet this is now needing to be balanced against the looming threat of recession, with both the US and the UK potentially already in that negative situation. Will Gold Continue its Recovery? Gold finds itself right in the middle of this economic balancing act. The threat of rising interest rates and indeed the implementation of these hikes have been the principal drag on the price of gold in the last few months. On the face of it, the market reaction to the Fed’s latest large hike, a second consecutive increase of 75 basis points, looks to be overdone.  Although the hike was in line with market expectations, the move still represents one of the largest in US history and higher interest rates are a clear negative for gold due to its lack of yield making other, interest-paying asset classes, such as bonds, more attractive. The fact gold has been able to stage such a recovery at the tail end of July is entirely due to revised market expectations on how great future Fed interest rate hikes will be and for how long the US central bank will maintain its current hawkish stance. Eyes on the Upcoming FOMC Minutes How much leeway the Fed has in its upcoming rate decisions will largely be determined by the health of the US economy. The release of the latest US job opening data on Tuesday will therefore be keenly anticipated while investors and central bankers alike will be hoping that the US inflation figures due out on August 10th show that inflation has peaked. While solid data is a key factor in determining price moves, words and rhetoric have often proven as significant a catalyst. As such, the release of the minutes of the Federal Open Market Committee on August 17th will be pored over by analysts and traders, desperate to gain an insight into how high and for how long the Fed intends to raise rates for. Gold Caught in a Balancing Act Gold finds itself hostage to the Fed actions with the two main drivers for the precious metal’s underperformance in July, an aggressive Fed and a strong dollar, set to remain the key determinants of gold’s price action in August. The recent rally underlines the strength of the underlying support that remains among gold investors and should provide a strong floor on its price but how much more ground gold can claw back on the upside will be capped by what August’s interest rate decision has in store and the consensus in the market leading up to it. Silver Outlook for August Silver investors finally have some good news to cheer with the price climbing back above $20 an ounce to recover back to the level it was at the end of June. The key question: is this the start of a silver surge? A Positive Outlook Ahead? Certainly, the fundamental outlook remains very supportive for silver with the metal a key component in the energy transition, used both in photovoltaics for solar energy and in batteries for electric vehicles such as Tesla and BYD. Indeed, silver is set for a record year of demand, according to the Silver Institute. However, both those statements have been true throughout the year and this didn’t stop silver’s price plunging from above $26 an ounce to below $19 an ounce in a matter of weeks. So why would things be any different now? A lot of the factors that were in place back in April when silver was trading at much-elevated levels from its current price remain true today. The war in Ukraine is sadly showing no sign of ending so silver’s haven appeal is still attractive. Inflation is still raging with silver considered a potential hedge against fast-rising consumer prices. And the fundamental outlook remains positive, as already stated. Has Silver Reached a Potential Bottom? The big change, and the cause of silver’s price plunge from April onwards, has been the implementation of a series of interest rate hikes by the Federal Reserve allied to the knock-on impact that has had in sending the dollar, which silver is priced in, to record levels. With the Fed still in the middle of its hike cycle, with another increase expected in August, silver’s potential path upward has plenty of obstacles in front of it. Yet with silver having shown where the potential bottom in its price is, now could be a timely opportunity for the brave investor to buy into silver’s recovery story. 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 inwriting 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 renewableenergy 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.

Rupert Rowling
Rupert Rowling

01/08/2022

Gold Starts August By Holding Around $1,760 as Markets Digest Fed’s Future Intentions

Gold is starting a new week holding around $1,760 an ounce as the markets assess the true state of the economy as well as the likely future action of central banks across the world. Later this week brings the latest interest rate decision by the Bank of England and while this is likely to have less material impact on the gold price than that of the Federal Reserve, it will still be an important indicator of how aggressive central banks feel they need to be to bring inflation back to its 2% target. Recent comments from Fed officials hint at the market’s initial reaction to the Fed’s rate hike last week that focused on rhetoric that supposedly pointed to a less aggressive strategy by the US central bank going forward, may be misguided. A large portion of markets' recent bounce, which gold has also been a beneficiary of, has been predicated on future Fed rate hikes being smaller with fewer of them required. If this proves a false dawn then a fresh slide of both equities, particularly growth stocks, and gold can be expected. For now at least, gold is holding on to the recovery it made at the end of last week awaiting the next set of data, such as this week’s US jobs figures, to provide insight on the health of the US and indeed global economy. 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 inwriting 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 renewableenergy 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.

Rupert Rowling
Rupert Rowling

01/08/2022

Silver Reinforces View That Bottom Has Been Reached as Price Holds Above $20

Silver is holding above $20 an ounce, reinforcing hope among holders of the precious metal that the price did indeed reach its bottom in July and that August can bring further upsides. The decisions by central banks will be a key determinant of how much further silver can recover with the Reserve Bank of Australia and the Bank of England both expected to announce increases of 50 basis points to their benchmark rates later this week. While these two banks don’t carry the same sway as the Federal Reserve in terms of the price reaction they have on markets, investors will still be interested to hear the bankers' view on the state of their respective economies and how much further they feel they will need to raise rates. Given that it was this change to a more aggressive monetary policy that sparked silver’s slump in price from mid-April onwards, these rate decisions will still be a source of worry for holders of the metal. The hope that silver and indeed the broader market is clinging to is that inflation is peaking and will track lower over the coming months and with the global economy still in a very fragile state, central bankers will reduce their path of aggression in the coming months to avoid tipping their economies into recession. How right this hypothesis proves will be the key in determining whether silver’s strong fundamental story can be heard or whether it is once again overwhelmed by hawkish monetary policies. 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 inwriting 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 renewableenergy 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.

Rupert Rowling
Rupert Rowling

01/08/2022

Silver Leaps Back Above $20 as Signs of Smaller Future Fed Hikes Finally Bring Price Relief

Silver is back above $20 an ounce! After months of silver’s price only going one way, the tentative evidence of the bottom being reached has now developed into a recovery of sorts following the comments supporting the Federal Reserve’s interest rate decision earlier in the week. So strong has been the initial reaction to signs that the Fed may be less aggressive with future interest rate moves that silver looks set to end July almost back where it started the month. This is a neat illustration of silver’s increased volatility compared with its precious metal peer, gold. The same factor, a potentially less aggressive Fed, has also seen gold recover some of the ground it has lost over the course of the month but while gold still remains some way below the levels it was at the end of June, silver’s outsized gains have seen it make up for lost time and be back above the psychologically important threshold of $20 an ounce. Silver investors will be hoping this is the start of a sustained rally as, from a fundamental perspective, the price still looks some way off fair value given the burgeoning demand for the metal as part of the energy transition. However, silver’s volatility has left many a punter burnt in the past and while the long-term outlook remains supportive, nearer-term factors of how great the Fed’s next interest rate move actually is as well as concerns that the world is tipping into a recession, and therefore diminishing industrial demand for silver, may yet drag on silver’s attempts to recover more of the ground it has lost since mid-April. 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 inwriting 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 renewableenergy 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.

Rupert Rowling
Rupert Rowling

29/07/2022

Gold Recovers Some of its Losses From Challenging Month on Signs of Less Aggressive Fed

On the last trading day of July, gold looks set to end a challenging month on a positive note as signs that the Federal Reserve may be less aggressive with its future interest rate hikes have allowed the precious metal to recover some of the month’s losses. While the US central bank did confirm market expectations with another 75 basis points increase in its benchmark rate earlier in the week, some of the rhetoric that supported the announcement was interpreted as the Fed being less likely to make such large moves going forward. The fact that gold has been able to gain so much since the Fed’s announcement, with the price gaining about $40 an ounce to around $1,760, shows there is still significant support for the haven asset as talk of a recession in the US and other countries intensifies. How much further gold can recover will largely be determined by the same two factors that pushed it down earlier in the month: the strength of the US dollar and the actions of the Fed, both in terms of comments by central bank officials and the actual interest rate moves themselves. With markets still remaining very jittery, it has often been words that have spooked or emboldened investors and traders, more so than the final action which has often been priced in by the time the move arrives. 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 inwriting 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 renewableenergy 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.

Rupert Rowling
Rupert Rowling

29/07/2022