Hawkish Fed Keeps Silver Under Pressure Despite Bullish Fundamental Outlook

Silver is trading at the lower end of its recent range following a series of hawkish comments from a variety of Federal Reserve officials over the last week or so that have put the precious metal under pressure.

The US central bank committee appears to be set on raising its benchmark interest rates aggressively over the coming months as it tries to bring stubbornly high inflation back under control. As such, silver’s appeal is dwindling with its lack of yield making it less attractive in an environment where investors can generate a steady return on other assets. 

This hawkish macroeconomic environment is putting a significant ceiling on silver’s price, despite a buoyant fundamental outlook. It was interesting to note that at this week’s LBMA conference, participants were much more bullish for silver than gold with an aggregate forecast of $28.30 an ounce for the year ahead, based on the prospect of upcoming supply tightness.

If silver can ever clear this heavy cloud of central banks across the world continually raising rates, then the metal’s key role in the energy transition, notably in solar cells and batteries for electric vehicles, will finally give silver its chance to shine.

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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