The perfect storm hit the silver price in the last few days, and the precious metal is now attempting to find footing near $21 following a sharp sell-off that dragged prices to a 7-month low amid concerns over a prolonged high-rate environment.
The descent in silver prices can be attributed to several factors. Investors are growing increasingly apprehensive about the potential of a long-term high rates environment. Compounding this, the US dollar has continued to strengthen while interest rates remain high.
The spectre of enduring high rates poses a threat of ushering in a recession, or at the very least, an economic slowdown, a scenario that could dent demand for silver, given its substantial industrial application.
From a technical point of view, after the black tunnel of the last few days, yesterday we saw the first attempt at consolidation, as silver prices, after dipping to $20.7, rebounded to hover above the $21 mark for several hours. We cannot yet see any inversion signal, but the price has found a solid support zone.
The bearish pressure on silver will likely remain unchanged for a while, but the rapid pace of the recent sell-off might prompt a reassessment among investors. As volatility subsides, long-term buyers could re-emerge, aiding price stabilization efforts.
Carlo is an external market analyst for Kinesis Money. With a credential background in Economic Finance and International Exchange (MA), Carlo’s critical analysis of gold and silver markets’ performance is frequently quoted by leading publications such as Forbes, Reuters, CNBC, and Nasdaq.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.
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