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.
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.
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.