Following the news of potential rising U.S interest rates, alongside a strengthening dollar, silver has been experiencing some volatility over the past few weeks.
However, the use of the word ‘volatility’, need not be interpreted negatively for the precious metal. In fact, it has been forecast, that during 2017, the price of silver has the potential to possibly rise by around 21.5%.
Take an Interest in the Dollar
Last week, the U.S dollar appeared to be falling, which meant that the price of silver increased. However, this increase was soon overturned as the dollar began to gradually build in strength.
The U.S Federal Reserve Chair, Janet Yellen, spoke at the House Financial Committee about three possible interest rate hikes during 2017. For silver, this news had a negative impact, as it pushed the silver price downwards.
Down but Not Out!
Yet, the dollar’s strength was also short lived. Silver eventually gained by 0.2% last Wednesday (15th February) and closed at $17.95. The gradual rise in silvers price continued into Thursday, as the market had time to settle following Yellen’s comments regarding inflation and interest rates. As such, investors began to turn back towards the silver metal, as the effects of Yellen’s rate hike statements began to fade, and the dollar grew weaker. Last Thursday, silver closed at $18.06.
Silver ended the week on Friday at a fix price of $18.00, which is highly significant, as $18 dollars per ounce is very close to silvers 200-day moving average. Silver’s 200-day moving average is calculated by taking the last 200 closing prices, adding them together and dividing them by 200. If the figure from this sum breaks above the average, then this can potentially signal that prices for silver could experience higher trends in the long term.
Hereby, Silver’s turbulent week, could arguably be a sign of things to come. There could be indications that the precious metal could obtain the 21.5% increase over the course of the year.
Supply & Demand
It has been reported that supply and demand dynamics could work together to give silver prices a boost in 2017. Last year, the silver mines allegedly cut production by around 2%, and that decrease could only continue during 2017. As such, silver could experience higher price points, as the metal becomes more scarce. Experts at Capital Economics have predicted that at the end of this current quarter in 2017, silver prices could reach $19 per troy ounce, and could potentially climb to around $22 dollars as 2017 ends.
Of course, it could always be wise to air on the side of caution when working with predictions, and there is still a chance that silver could experience some resistance this year, especially given the instability of some of the world’s economies and the current global political upheaval. It is always difficult to determine exactly what will happen. As such, investment decisions are never easy ones to make and should always be undertaken after personal research.
However, given the predicted outlook for silver, are you inclined to agree with a possible boost in price for the precious metal? Or are you slightly more skeptical about silvers 2017 potential price points?
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.