Silver has weakened in March to levels we have not seen since December, and the current price stands around $24. Some analysts say that we could see even lower prices in the weeks ahead as the US dollar remains strong.
Fundamental analysis: the US dollar’s strength is one of the reasons that is driving Silver lower
Silver has extended its correction from the recent highs registered in the first week of February and technically looking, the price of this precious metal could fall even more in the upcoming days. Financial markets remain supported as investors bet on a recovery that is expected to deliver the fastest economic growth since 1984.
The dollar index has returned at levels from November 2020, and the US dollar’s strength is one of the reasons that is driving Silver lower. FED raised its GDP estimate for 2021 to 6.5% from 4.2% last week, while the weekly jobless claims showed improvement in the US.
Rising US government bond yields continue to positively influence the dollar, which could further depress silver prices. Also, Biden’s massive spending plan is increasing the likelihood of inflation down the road, and that also lifts yields, making it expensive to hold Silver and gold.
The US president Joe Biden will announce today details of his “Build Back Better” plan, which includes $2 trillion for infrastructure spending across the country.
The Federal Reserve may not worry about the possibility of higher inflation, but higher inflation expectations will maintain government debt yields up for the upcoming period. Investors usually buy Silver and gold to hedge against inflation, but today we have a different practice, and the focus remains on the dollar.
On the other side, vaccine immunization will not
