By Nicholas Earl
Silver prices climbed above $22 per ounce today as investors turned to the precious metal amid an unfolding banking crisis.
While it has not enjoyed the same gains as fellow safe haven asset gold, the collapse of three US financial institutions including Silicon Valley Bank, alongside the rushed rescue of Credit Suisse, has rattled market confidence and pushed investors towards commodities.
Silver prices spiked at $23.73 per ounce yesterday before rebalancing at just over $22. Prices then rose again during this morning’s trading to $22.54 per ounce. Last week, prices were barely above the $20 milestone.
Until recently, the metal has been treading water, remaining less appealing to investors than gold, which climbed over $2,000 per ounce for the first time since Russia’s invasion of Ukraine caused a major rally last spring.
Rupert Rowling, market analyst at Kinesis Money said: “Silver’s failure to make more significant gains so far illustrates how out of favour the precious metal had become in February even with its healthy industrial demand outlook.
“Concerns over rising interest rates have weighed heavily on the case for silver so this week’s Federal Reserve interest rate decision is certain to have a significant impact on the metal’s ability to make further gains.”
Analysts were confident of a minimum 25 basis point increase by the Fed, particularly after chair Jerome Powell’s bullish testimony to Congress earlier this month.
However, Rowling was less certain this would happen now, which would pave the way for further rallies for commodities such as gold and silver.
“If the Fed does decide to keep rates where they are then that will open the door for further silver gains with the metal having plenty of ceiling to climb to with its price still below where it started the year,” he said.
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