Where silver heads from here will be largely determined by the outcome of the Federal Reserve’s next interest rate meeting in the middle of June. After making some considerable gains when it seemed likely that the Fed may have paused on its interest rate hike cycle, the continued hawkish rhetoric from officials from the US central bank has raised the prospect of another increase in June, particularly if the country’s jobs figures remain strong and provide the Fed with some leeway.
Seeing as this has been the single biggest headwind for silver in the last year or so, the prospect of more interest rate hikes would be damaging for its price. However, if the Fed does indeed keep its rate unchanged then it would enable more focus to be trained on the metal’s strong industrial demand. With another supply deficit forecast for 2023, from a purely fundamental perspective, silver’s current price looks too low. The question as ever will be whether this strong fundamental outlook finally gains its prominence in June or will other macroeconomic factors supersede it?
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