Should I buy Silver at the current price?

  • Silver has weakened from its recent highs
  • The U.S. Federal Reserve switched to a more hawkish tone
  • Russia’s attack on Ukraine remains in focus

Silver has weakened from its recent highs above $26, and we could see even lower prices in the weeks ahead if the U.S. dollar remains strong.

The U.S. Federal Reserve switched to a more hawkish tone

Silver price has weakened from its recent highs above $26 registered on March 08 as the U.S. Federal Reserve hiked the main rate by 25 bps which positively influenced the U.S. dollar.

The appreciation of the U.S. dollar in the last several weeks had a negative influence on silver, and rising U.S. interest rates tend to pressure silver since they increase the opportunity cost of holding the non-yielding asset.

The U.S. Federal Reserve switched to a more hawkish tone, and Fed Chair Jerome Powell said interest rates could rise quicker.

Federal Reserve Chair Jerome Powell also warned that the Russia-Ukraine conflict poses a risk to inflation, and the FED could move more aggressively if inflation remains high.

Investors usually buy silver and gold to hedge against inflation, but now we have a different practice, and the focus remains on the dollar.

On the other side, the price of silver could find support again if talks to end the war between Russia and Ukraine worsen as investors look for safer places to invest their money.

U.S. President Joe Biden said that the “free world” opposes Russia’s invasion of Ukraine and that there is unity among major economies on the need to stop Vladimir Putin. United States President Joe Biden added:

I am not sure that Russia had changed its strategy in its invasion of Ukraine after Moscow said its focus was now to completely “liberate” the breakaway eastern Donbass region.

After three days of emergency meetings with allies of the NATO, G7, and European Council, Joe Biden will meet with Polish President Andrzej Duda.

NATO Secretary-General Jens Stoltenberg said that the alliance would continue to send weapons to Ukraine, while Vladimir Putin said that he aims to reach its goals despite many countries’ leaders calling him to put a halt to the war.

Technical analysis

Silver price has weakened from its recent highs above $26 registered on March 08, and the current price stands at $25.48.

 

Data source: tradingview.com

This precious metal’s price could find support again if talks to end the war between Russia-Ukraine worsen.

The current support level stands at $25, and if the price falls below this level, the next target could be around $23.

Summary

Silver has weakened from its recent highs above $26 after the U.S. central bank switched to a more hawkish tone. Fed Chair Jerome Powell said that interest rates could rise quicker than expected, and we could see even lower prices in the weeks ahead if the U.S. dollar remains strong.

Contact your Advisor for more information on how Mercer Capital Management can help you.