Silver has sunk below $21 an ounce with the price now at its lowest level since early November as the metal has been punished for its lack of yield at a time when interest rates look set to climb higher for longer than previously anticipated.
After briefly showing signs that silver had found a floor in the middle of last week, the precious metal’s fortunes have once again turned with the price dropping another $1 an ounce in less than a week.
This latest decline adds to silver’s curious 2023 so far with the metal entering the year looking set for a positive year with the factors in place for it to continue its strong recovery over the final quarter of 2022. Yet rather than continue to make gains, the price first tread water in January before enduring a sustained slump in February that has so far seen the price drop by more than $3 over the course of the month.
For now, silver is being punished due to macroeconomic rather than fundamental factors. The metal remains in hot demand from some of the key industries of our time, notably as a key component in the energy transition and also the rollout of 5G technology. Therefore, while the short-term outlook remains challenging, the case for a strong recovery once these interest rate clouds lift is well worth arguing.
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