Silver tumbles to two-year lows, why?

2022-05-16 15:38:48 GMT (Economies.com)
Silver tumbles to two-year lows, why?

Silver prices declined to two-year lows, carrying on the hefty losses from April and almost falling below $20 an ounce. 

 

The causes for these losses include the dollar, global central banks, and China's economy, and we'll elucidate all. 

 

Prices

 

Silver fell today to $20.45 an ounce, a July 2020 low, while down over 20% since April 18 as selloff pressures only accumulates. 

 

Dollar

 

The dollar index jumped to a fresh 20-year high at 105, in turn pressuring dollar-denominated commodity and mineral prices.

 

Such gains are due to the Federal Reserve's moves to control runaway inflation in the US, in turn accelerating the pace of interest rate hikes. 

 

Global Central Banks

 

Central Banks in the US, New Zealand, and Canada all hiked rates by 50 basis points this month to control runaway inflation.

 

Bank of England also hiked rates by 25 basis points for the fourth time in a row, with a similar hike by the Reserve Bank of Australia.

 

The European Central Bank is expected to follow suit soon enough, probably starting in July.

 

China's Economy

 

Chinese government continues to restrict movements in several major cities to contain a Covid 19 infection, in turn hampering economic growth.

 

China is the world's largest metals consumer, thus we see prices of all metals suffering when China's GDP suffers. 

 

Estimates

 

Now analysts expect a bearish trend for silver due to dollar's strength, with a potential to tumble below 20 and hit 18. 

 
 
 
  Symbol Last Change Chg.%
1.0427
-0.0154
1.4550%
1.2096
-0.0176
1.4311%
19.698
-1.669
7.811%
108.022
0.605
0.563%
111.50
2.47
2.27%
1799.775
-29.770
1.627%
 
 
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