Silver remains directionless as the strength of industrial demand for the metal is offset by the prospect of further interest rate rises by both the Federal Reserve and the European Central Bank.
Looking from a purely fundamental perspective, the case for silver to climb higher is clear with the metal set for yet another supply deficit this year as growing demand from the solar industry is outpacing mining production.
Yet while silver may be a commodity, its price is never determined solely by its supply and demand fundamentals with the macroeconomic conditions often having a greater bearing. This was clearly on display in 2022 when the Federal Reserve’s series of interest rate hikes weighed heavily on silver’s price, pushing it down from $26 to $18 an ounce over a series of months.
Yet while the price has recovered from its 2022 nadir, silver’s efforts to climb higher than its current level just below $23 an ounce are being stymied by the prospect of the Fed implementing another hike to its benchmark rate in July after the brief pause in June. With the expectation of a July hike long since priced in along with the strong industrial demand for silver, it will take a fresh catalyst to spark the price out of its current sideways drift.
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