Silver is sliding back towards $22 an ounce in a week in which the rhetoric on central bank policy has turned more hawkish with the likelihood of plenty more interest rate rises still to come.
As we saw last year, silver can fall quite sharply out of favour when central banks, particularly the Federal Reserve, are hiking rates so the talk of multiple increases still needed to fully curb inflation will be a blow to silver investors.
While last year’s series of large hikes by the Fed saw the price of silver plunge from $26 an ounce to below $19, the impact is unlikely to be as marked this time around with much of the hikes now priced into silver’s price. The key question now is how many more hikes do the Fed and the other central banks still have in store?
For silver investors, the hope will be that the new peak on the Fed’s rate arrives now later than September and attention can once again turn to the metal’s outstanding fundamental case in which supply will again fall considerably short of meeting demand. So while $22 an ounce may be the best silver can achieve in the short-term, the long-term view sees silver trading considerably higher than where it is currently languishing.
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