Silver is enjoying a great run with the price climbing to around $25 an ounce to its highest level in almost a year. For silver investors, these gains are long overdue after the metal looked set to enjoy a strong 2023 yet failed to deliver on this promise for the bulk of the first quarter.
Now the headwinds that have been holding silver back look to be dwindling and the focus can shift back to the metal’s strong fundamental outlook and push the price up towards the late $20s.
A weaker US dollar, which silver is typically priced in, has given room for silver to grow with the metal already enjoying a boost from safe-haven demand in the wake of the collapse and near collapse of banks in the US and Europe last month. Add in a further boost as expectations increase that the Federal Reserve will soon end its policy of increasing interest rates and the market conditions for silver look very conducive.
How long silver can sustain its rally will largely be determined by how accurate the current forecasts of the end of rate hikes prove. Silver has found itself hostage to the words and actions of the Fed with last year’s multi-month slump triggered by the US central bank imposing a series of large rate hikes while the metal’s underwhelming performance in the opening months of this year largely down to changed expectations in how much longer the Fed would keep increasing rates for.
With the next interest rate decision not due until the start of next month, silver has a good opportunity to continue its momentum and push up towards the $30 an ounce level that is a truer reflection of its value considering how important its conductive qualities make it in the energy transition, where it is heavily used in the production of solar energy and electric vehicles.
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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