Silver is trading at the lower end of its recent range following a series of hawkish comments from a variety of Federal Reserve officials over the last week or so that have put the precious metal under pressure.
The US central bank committee appears to be set on raising its benchmark interest rates aggressively over the coming months as it tries to bring stubbornly high inflation back under control. As such, silver’s appeal is dwindling with its lack of yield making it less attractive in an environment where investors can generate a steady return on other assets.
This hawkish macroeconomic environment is putting a significant ceiling on silver’s price, despite a buoyant fundamental outlook. It was interesting to note that at this week’s LBMA conference, participants were much more bullish for silver than gold with an aggregate forecast of $28.30 an ounce for the year ahead, based on the prospect of upcoming supply tightness.
If silver can ever clear this heavy cloud of central banks across the world continually raising rates, then the metal’s key role in the energy transition, notably in solar cells and batteries for electric vehicles, will finally give silver its chance to shine.
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