Silver Price Crash Goldman

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Silver Price Crash Goldman

Silver Price Crash Is Due To Rising Yields

Silver prices are trending lower after reaching new highs a few months ago. It's normal to wonder why the Silver prices are crashing after the massive rally seen in it a few months back.

According to Goldman Sachs, one reason behind the sell-off in Silver is the rising yields. This is further intensified by the US dollar's strength and weak momentum in the precious metals market.

Fed To Keep Rates High For Longer

Also, the market is shifting its focus back to the Federal Reserve. The US inflation data and retail sales numbers clearly highlight that the Fed will have to keep the rates higher for a long period of time.

In short, the hopes of multiple rate cuts or lower rates are slowly fading away. Naturally, this is bad news for the precious metals like Silver as they are non-yielding assets.

While the Silver is slipping lower, strong momentum is seen in the equity markets. In addition, the Dollar demand is also rising, which means there's little reason left to invest in the metal markets for now.

Also, the Silver rally in the past had stretched the positioning. So, we are seeing the Silver's positioning return to normal levels.

The driving force behind the surge in metal was mostly inflation hedging and geopolitical tensions. Another factor was speculative momentum, which led to aggressive buying.

But now, the momentum is fading away, and we are seeing violent corrections in the Silver prices. Amidst all of this, the industrial demand has also dampened.

The Chinese commodity demand is showing signs of weakness, which has also impacted the sentiment. With all things combined, it becomes clear why the Silver prices are falling.

However, the long-term trend of Silver will remain bullish due to elevated inflation expectations and geopolitical risks. Also, the Fed will have to eventually lower the rates as high rates are hurting the economy.

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