Silver has broken through the threshold of $25 an ounce with the metal finally enjoying the kind of price rally its strong fundamental outlook had been calling for.
A weaker dollar and the prospect of the Federal Reserve soon bringing its aggressive monetary policy to tackle high inflation to an end have been the catalysts silver has needed to mount its recent climb.
The fundamental case for silver, in which the metal is set for another supply deficit this year, has been evident all year but this has been overshadowed by the wider macroeconomic environment in which the Fed and other central banks have been implementing a series of rate hikes to bring down stubbornly high inflation.
And while we haven’t yet reached peak rates, with another Fed hike expected next week, investors are starting to look ahead to the end of that cycle and instead focusing on the positive long-term outlook for silver with its key role in the energy transition.
As such, now that silver has broken through the first ceiling at $25 an ounce, the next target for the metal is $26 an ounce and then the highs of both this year and last a little above that threshold. Given that silver finally has a favourable wind behind it, those landmarks could be achieved in a matter of weeks rather than months.
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