Silver Retreats 3.2% as Markets Digest Hawkish Fed

Quick overview

Silver closed the week down roughly 3.2% (dropping about $2 to $3 per ounce). This brief retreat was largely triggered by a hawkish stance from the Federal Reserve, signaling that the central bank might maintain higher interest rates later in the year to curb remaining inflationary pressures.

Analysts note that silver has faced a massive multi-month correction after a spectacular six-year bull run that saw it peak near $121 per ounce earlier in January. Currently, the market is finding solid buying interest right around the $60 to $64 support shelf. Holding above $60 keeps the broader long-term uptrend intact, while a drop below that could trigger heavier liquidations.

Silver has no yield, so when newly appointed Fed officials or hawkish data suggest that interest rates are staying higher for longer, it increases the opportunity cost of holding the metal. Investors pivot to cash and bonds to capture those guaranteed yields instead.

The macro tug-of-war for silver right now boils down to two things: The Bears point to a hawkish Fed policy and a stabilizing US dollar, capping short-term gains.

The Bulls: Point to a massive, ongoing physical supply deficit (estimated around 65 to 70 million ounces this year alone) and strong industrial demand from solar/tech that keeps a hard floor under how low the price can actually drop

Olumide Adesina

Financial Market Writer

Olumide Adesina is a French-born Nigerian financial writer. He tracks the financial markets with over 15 years of working experience in investment trading.