Silver has fallen back below $19 an ounce after the resilience shown above that key recent threshold gave way under the heavy pressure brought by last week’s range of interest rate hikes by central banks across the world.
However, while the short-term price charts are disappointing for silver investors, the recent trend would point to silver making gains again very shortly with previous dips prompting buying interest from traders recognizing an asset that has become undervalued.
Interest rate rises, particularly those by the Federal Reserve, have been the single biggest factor in silver’s decline from above $26 in March down to below $18 last month. So with no sign of central banks letting up the pressure in their efforts to curb persistently high inflation, silver is unlikely to be able to recover to levels seen in March and April any time soon.
But while $26 an ounce may be out of the reckoning, a recovery to $20 an ounce still looks entirely feasible given silver’s strong fundamental demand outlook, with the metal a key component of the energy transition. Traders keep recognizing this fact and take advantage of macroeconomic-induced dips to top up their holdings to prepare for the medium-term rally that silver is surely due.
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