Most commodities had a negative performance last week. WTI and Brent, the two main benchmarks for the oil price, were particularly under pressure and lost around 14-15%. Wheat also posted a double-digit decline.
The scenario in Ukraine remains extremely complicated. Investors seem to be a bit more optimistic about the possibility that some sort of agreement might be found in the next few weeks, which has pulled down the price of most commodities.
Also, expectations are growing that the Federal Reserve will become more hawkish in the next few months, in an effort to deal with rampant inflation.
According to the CME FedWatch Tool, over 70% of investors forecast a 50 basis points rise in interest rates in May, and see rates reaching 2.50% by the end of 2022. Although the new week started with a modest rebound for silver, the spot price is still just below the $25/oz mark as uncertainty is still dominant.
From a technical point of view, a decline below $24.6 would represent a negative signal, while a recovery above $25.2 could trigger momentum, increasing the chances of further recoveries.
The gold/silver ratio posted a modest increase to 78 last week, showing some weakness for silver versus the yellow metal. The evolution of the situation in Ukraine and U.S. monetary policy is likely to remain the main market drivers for the price of silver.
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Carlo Alberto De Casa is an external Market Analyst for Kinesis Money.
He also writes as a technical analyst for the Italian newspaper La Stampa.
Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018.
This report is not an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance.