Silver is hovering just above $21 an ounce after a quieter trading week, which included the US Thanksgiving holiday, that has seen less dramatic moves and enabled traders and investors to take stock.
Silver’s outlook remains characterised by two contrasting factors: the strong fundamental case for the metal and the impact of interest rate hikes by central banks across the world. For much of the year, silver’s fundamental case didn’t get a look in and instead all the focus was on the detrimental impact of ever-increasing interest rates.
However, for the last couple of months, the metal’s strong demand from the solar, electric vehicle and tech industries has gained attention. From a fundamental perspective, silver’s current price remains far too low with a year of record demand anticipated, with recent holdings data also showing silver being pulled out of vaults for coin and bar production.
Yet any efforts to make sustained gains back to the $26 an ounce level seen in March are thwarted by the Federal Reserve’s need to keep on raising its benchmark interest rates, which dwindles the appeal of a non-yield-bearing asset like silver.
With December near certain to see another hike by the Fed, albeit potentially slightly smaller than recent months, this is putting a cap on silver’s price. Yet the moment there is any hint of a dovish pivot by the Fed, expect silver to make significant gains.
Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
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