With prices testing resistance just below $19 an ounce, the silver market is witnessing some fresh buying impetus; nevertheless. One research group anticipates prices to close the year on a sour note as industrial demand continues to put pressure on the precious metal.
By the end of the year, Economist commodity analysts predict that poor industrial demand would force silver prices back down to $18 an ounce.
As of recent trading, December silver futures were trading at $18.93 per ounce, up 3.23% on the day. Silver prices have fallen 19.5% so far this year.
Kieran Tompkins, a commodities economist at the U.K. research firm, specifically stated in the report. That low electronic demand for silver will have an impact on prices for the remainder of the year.
“For a while now, we have been certain that the shift in global purchasing patterns during the first two years of the epidemic from services to products (particularly consumer electronics) would only be transient. There are some indications that the economy is starting to turn around again. Including stagnant real expenditure growth on goods and recovering service consumption “Thomassen wrote.
Due to its superior conductivity qualities over all other metals, Silver is employed in a wide range of electrical devices.
Economic Growth and Recession.
The expert further noted that information on global electronic manufacturing indicated activity had stalled as demand has fallen precipitously this year. Tompkins said that future demand will be affected by weaker economic development.
“We anticipate recessions in a number of significant economies. The shock of inflation and the squeeze on actual household earnings have already had a significant negative impact on economic growth.
Additionally, vigorous monetary policy tightening will be a significant drag in the future ” he added. “Where we don’t predict recessions, we nevertheless believe. That there will be a protracted period of growth that is below average. Even when some economies do mount recoveries in the coming year, we believe they will generally be modest.”
Economist anticipates that silver will struggle as a monetary metal due to tough headwinds from the U.S. currency and rising bond yield. In addition to sluggish industrial demand.
As the Federal Reserve keeps aggressively raising interest rates. The U.S. dollar has seen unheard-of momentum, propelling it to a 20-year high against a basket of currencies. The American central bank hinted last week that interest rates may increase up to 4.6% in 2023.
“We have little reasons to believe that the fed funds rate will reach its peak at 4.50–4.75% in the first quarter of next year. The 10-year Treasury yield is therefore predicted to end this year at or near its present level. Furthermore, We believe that the US currency will continue to be a hindrance.