Silver prices fall as a result of the Fed’s actions
Commodity exchanges are feverish, following the stock markets. Thus, the other day in New York there was recorded a new fall – silver prices fell to the level of June 2020. The futures price reached $17.8 per ounce, having unexpectedly decreased by 2.5%.
Experts note that the price of silver has been falling for some time. It fell by 11% over a month, which was a record fall since 2020. Other precious metals are also declining. Gold futures fell almost 0.8% to $1,710 an ounce, while platinum sank 0.9% to $825 an ounce.
Experts single out the tightening of policy on the part of the Federal Reserve as the reason for such fluctuations in metals. After the speech of its head Jerome Powell, many analysts began to review their forecasts. He said that the Fed plans to tighten monetary policy in the future. In addition, Powell promised an increase in interest rates, arguing that such a move is the best solution to curb inflation.
Silver is an important metal for the global economy. This metal as the main element is used in the production of solar panels, which means the demand for it will grow. If we analyze the dynamics of this asset, we can see that there are spikes every 10 years. Silver recorded significant growth during the pandemic when investors turned their attention to defensive assets. There was instability in the market then, and investments in silver and gold were always considered safe.
Last February, the value of the metal reached its highest value in 8 years – $30 per ounce. An increase in demand for the metal was recorded last autumn, first of all, due to demand in industrial sectors. The active development of 5G infrastructure and interest in green energy stimulated an increase in purchases of silver. Experts forecast that demand for the metal will increase by 5% by the end of this year.
However, a surge of investment demand for silver has not yet been observed. The reason is the increase in inflation and measures to regulate it on the part of central banks. Assessing the current situation, investors are not in a hurry to buy gold and silver, they focus on assets with more predictable income. As a result, the market of precious metals stays in a bear cycle, and so far there are no tendencies to its end. It remains only to wait, how silver will behave by the end of the year, and whether its value will be able to repeat the previous record.