Silver futures prices hovered above $24 per ounce after breaking out of its downtrend in the last month to end a volatile 2022 up 2.3% $24.04 an ounce. Gold also rebounded from its lows; the catalyst was the retreat of the rampant US dollar. Prices were supported by increased demand for precious metals amid recession concerns and looming supply shortages. Geopolitical risks triggered by the Russian invasion of Ukraine ramped up demand for bullion prices but pulled back until the US dollar reversed in November.
Silver bounced off the bottom trend line and was energizes in the sphere of influence. Back over 50wma after spitting tenkan, now providing support after reversed. Closing above the outer channel which is now resistance. Major support is 50wma and tenkan.
After the invasion of Ukraine Western sanctions threatened supply from major producer Russia and lifted prices to a year-high of $26.4. From there global central banks aggressively raised interest rates which sent the dollar higher and silver lower. Tight monetary policy reduced the demand for silver as an industrial input for electrical conductors, tracking the mid-year decline for copper.
In the last quarter of the year looming supply concerns drove silver to outperform gold and palladium in 2022. Signs of low supply also supported prices, as New York’s COMEX inventories fell 70% in the last 18 months to just over 1 million tonnes. London Bullion Market Association stockpiles fell for the 10th straight month to a record-low 27.1 thousand tonnes in November.
There are several factors that can affect the volatility of silver prices. Some of the key factors include:
- Economic conditions: Silver prices tend to be more volatile when the global economy is uncertain or in a downturn. This is because investors tend to flock to safe-haven assets like gold and silver during times of economic uncertainty.
- Political events: Political instability or events such as elections, wars, and natural disasters can also contribute to silver price volatility.
- Supply and demand dynamics: Silver prices can also be affected by shifts in the supply and demand for the metal. If there is a sudden increase in demand for silver, for example, prices may rise rapidly. Conversely, if there is a glut of silver on the market, prices may fall.
- Speculation: Silver prices can also be affected by speculation, with investors buying or selling based on their expectations of future price movements.
It is worth noting that silver prices are generally more volatile than gold prices, which tend to be seen as a more stable, safe-haven asset. This means that investing in silver carries a higher level of risk compared to investing in gold.
From The TradersCommunity Research Desk