A weaker U.S. dollar and the potential for the Federal Reserve to pause its monetary tightening strategy bolstered the market mood, sending silver prices soaring to a one-month high. The most recent data revealed a slight increase in consumer prices, suggesting that inflation may be slowing down. Silver has historically served as a safe-haven asset, but the expectation of more interest rate increases by the Fed has put pressure on silver prices.
Although silver may briefly achieve a price of $25.00, there is a greater possibility that it will fall in the coming quarter, possibly to the low $20s. The outcome of the central bank’s impending rate-setting meeting, as well as significant economic reports like the Producer Price Index report and initial jobless claims, which may shed more light on the state of inflation, are all highly anticipated by the market.
Due to lower-than-anticipated inflation pressures projected by the U.S. government, the silver market has recently outperformed the gold market. Analysts warn that silver has to experience a substantial shift in investor demand as well as renewed industrial interest in order to leave the $23 to $25 per ounce level in the near future.
Despite predictions of an annual deficit this year, worries about persistently higher interest rates, diminished speculative enthusiasm, lower physical demand due to Chinese economic weakness, and an impending U.S. recession raise the possibility that the silver market may not be as tight as anticipated. As a result, it is anticipated that silver will trend between $22 and $27 per ounce during the following three months.
However, if the Federal Reserve starts lowering rates in reaction to recessionary conditions, silver may experience a rally before the end of the year. Silver could aim for $27 per ounce in the final weeks of 2023 as central banks shift to a more accommodating monetary policy stance in the hopes of an economic recovery in early 2024.