Silver has been under considerable pressure lately and it is not likely to fluctuate much before the release of key inflation data. Investors are expecting the gold-silver ratio to widen considerably in favor of gold, which will dent demand for silver. Silver prices have been declining in recent days because of three reasons. First and foremost, investor concerns over a potential escalation conflict in Ukraine has weakened demand for silver and other precious metals like palladium by intensifying geopolitical risk concerns; second, speculators are favoring gold over silver as a hedge against higher interest rates because they think that it will be more profitable; third, traders are selling their bets on Silver miners to reduce their exposure to prices that have surged way beyond the average cost of production levels.
Price forecast for silver –
The downward pressure on silver is unlikely to subside until the market gets some clarity about the release of key inflation data, which is due for release today. Investors are betting on a surge in core inflation figures that would impel the Federal Reserve to hike interest rates much faster than previously anticipated. They expect a sharp decline in industrial production and weaker than expected retail sales numbers during May, which will lead to a spike in retail prices and hence push up core inflation. If this happens, it will significantly boost expectations that the central bank will raise rates at least once by June despite growing concerns about a fiscal crisis in Washington. This will boost demand for safe-haven assets like gold and reduce appetite for bullion’s traditional rival — silver.
Silver Price Forecast: Bearish bias
However, although the market has turned bearish on silver in the near term, longer-term prospects for this metal are not very bright either. The reason: a sharp reduction in demand from China is likely to weigh on prices for this metal for years to come. This is because China’s economy is headed toward a structural transition away from investment to consumption. As such, its demand for industrial metals like silver may reduce considerably over time.
What’s the current silver price?
The current spot price for silver is around $21.92/oz, and this is where the futures market appears to be trading at. However, investors should be aware that spot prices can be quite different to the futures market depending on the regulated exchanges that they choose to trade on. Some investors might feel more comfortable trading in a regulated environment, which usually carries higher liquidity.
Key Inflation: Market Reaction
Silver prices are likely to move within a tight range before the release of key inflation data today. Inflation is expected to spike higher, primarily on account of surging demand for gasoline and healthcare. This will pressure the Fed to raise interest rates more than previously anticipated. If this happens, then it will positively impact gold and silver prices because it would fuel concerns about the US currency’s value among central banks, which may choose to diversify their reserves into bullion instead.
What’s the best silver price forecast?
For the short-term, silver prices will likely move within a tight range. However, if inflation expectations pick up, then this could push the price of silver significantly higher. The bottom line is that on the short term, this is a neutral market for silver.
How is silver priced on the futures market?
The spot price of silver is currently around $18.47 (£10.60) an ounce, but the price of this metal tends to move in a narrow range before and after the release of key inflation data. For example, in the past few days, it has remained relatively stable at around $18.50/oz (or £10.70 an ounce). This is slightly lower than its all time high of $19.55/oz (or £12.40 an ounce). However, this is still higher than where it was trading around a decade ago.
#MarketswithMC | Here are the latest trends in gold prices & trading strategy.
Check out how much gold and silver cost today 👇https://t.co/h01lFNa1FN#GoldPrice #Gold #Silver #SilverPrice
— Moneycontrol (@moneycontrolcom) May 23, 2022
Is silver good value?
In terms of relative value, silver has returned an annualized 22% over the past decade. This is slightly better than where platinum has performed over the same time period. The only precious metal that it trails is gold, which has returned around 30% per annum during the past decade. Good long-term returns are a sign that investors should hold silver for the long term to ensure that they benefit from any future price rises. During its most recent rally which started across in April 2013, silver prices actually outperformed gold by more than double. This trend looks set to continue in the near future too.
