Early 2024 has seen financial markets scale back their expectations of U.S. rate cuts, with many investors having believed this would start as soon as March. The consequential boost to the U.S. dollar and yields has created fresh headwinds to precious metal investment.
Even so, market expectations of U.S. interest rate cuts are still a little more dovish compared with the Fed’s more hawkish position. In the coming months, as the market gradually adopts a more hawkish stance, this will weigh on gold and silver investment. During this time, investor interest in silver could also be hampered by a still lackluster recovery in China.
Nonetheless, this weaker investment is likely to be temporary, and silver’s positive fundamentals should encourage decent bargain hunting. Once the Fed starts to cut rates, most likely in mid-2024, silver investment should begin to recover.
More importantly, with inflation on course to retreat towards the U.S. authorities’ official long-term target, the Fed is expected to signal further and accelerated easing next year. The impact of falling real yields and pressure on the U.S. dollar should also favor fresh silver and gold investment.
The Silver Institute is the silver industry’s primary voice in expanding public awareness of silver’s essential role in today’s world. Its mandates are to provide the global market with reliable statistics and information on silver and create and execute programs that help drive demand for silver.