Silver Price Tanks Over 4% on Warsh's Hawkish Comments
Silver prices plummeted by over 4% on Friday after Fed Chair Kevin Warsh's speech at Jackson Hole, where he indicated that the Fed is not done with rate hikes. This sent shockwaves through the market, causing spot silver to drop from $65.29 at the opening to $62.27 by late afternoon.
The metal fell harder than gold, which lost 3% on the same speech. The difference in their losses can be attributed to industrial demand, as silver is used in solar panels, electronics, and automotive components, among other applications. Higher rates slow down business spending, making it a double blow for silver.
The 50-day moving average is still below current prices, while the 200-day moving average has become overhead resistance. The weekly loss for silver was 3.78%, with gold losing 1.58%. This spread widened on Friday after narrowing earlier in the week when both metals rallied on the Treasury buyback announcement.
India's gold discounts widened this week as physical demand softened on speculation about an import duty rollback. Silver follows gold into the physical market in Asia, and weaker regional demand arriving on the same day as a hawkish Fed speech and a surging dollar removed support from underneath both metals.