Silver’s failure to climb back above $25 an ounce points to the strength of investor support fading for the time being. On the previous occasions in March that silver had tested this support level, the price had quickly rebounded back above the $25 threshold but this time it has instead continued to drift steadily lower.
Silver is so far being driven by the same factors as gold with the hawkish rhetoric from central banks in the US and Europe putting pressure on non-yield bearing assets such as silver and gold. While this is presenting a firm ceiling for any gains, the war in Ukraine is providing strong support to how low silver can drift.
With it now being about a month and a half since Russian troops first invaded Ukraine, the bulk of the fear trading prompted by this will have been priced in by now.
However, Ukrainian Foreign Minister Dmytro Kuleba’s recent request for weapons, weapons and weapons illustrated how long-lasting the conflict looks set to become with any fresh escalation likely to see a renewed rush to haven assets such as silver.
Indeed while for now silver seems stuck in gold’s wake, tracking its move both higher and lower, the fundamental outlook still points to silver’s potential to break out higher.
Industrial demand for the metal looks strong and may even strengthen further as countries rush to increase solar energy that require silver-containing photovoltaic cells. So while silver may be trapped in the doldrums for now, a fair wind to push it higher may just be over the horizon.
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