Silver could enjoy US midterms boost if dollar weakens, predicts expert
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Silver prices could enjoy a hefty boost if the dollar weakens on the back of the US midterms today, argues precious metal experts Kinesis Money.
Market analyst Rupert Rowling forecasts that the precious metal could rebound this week from its extended slump with a weaker US dollar and investor sentiment towards long-term fundamentals.
With the Republicans widely tipped to make inroads at the mid-terms today, there is the possibility the dollar could weaken – especially if it causes legislative gridlock with both houses split in Washington.
He said: “If this week’s midterm elections provide a negative reaction for the dollar, then silver could make further gains with strong support clearly mounting behind the metal to try and recover all of the losses since March.”
Silver climbed to a 10 month peak in March at $26.46 per ounce following Russia’s invasion of Ukraine, but have suffered a multi-month plunge following aggressive central bank policy.
Over the past eight months, the Fed has hiked interests rates by a collective 375 points, the fastest fiscal tightening cycle since the 1980s.
Currently, prices sitting below $21 an ounce at $20.70, but have crawled upwards in recent days with the US dollar easing from its earlier rallies.
Rowling argued this would provide the metal with sufficient wriggle room for its “strong fundamental case” to gain more prominence.
With the global economy veering towards a deep recession, he believed flight to safety assets are likely to attract more investors.
He said: “Its recent price action has shown a metal desperate to climb significantly higher than its current levels but having to overcome considerable pressure from ever-rising interest rates in order to do so.”
While the Federal Reserve and the Bank of England hiked interest rates again over the past week, silver was still able to make a weekly gain.
Rowling hoped this meant investor sentiment was shifting toward’s silvers long term appeal rather than immediate monetary policy.
He concluded” “The fact the price is able to make gains even with rate hikes continuing highlights the switching of focus to the longer-term outlook for the metal rather than short-term concerns.