Silver price fluctuation 16:3: Continues to fall deeply

Domestic silver prices

As of 9:30 am on March 16, the price of Kim Phuc Loc 999 silver bars (1 tael) of Saigon Thuong Tin Commercial Joint Stock Company Limited (Sacombank-SBJ) was listed at the threshold of 3.099 - 3.201 million VND/tael (buying - selling); down 75,000 VND/tael in both directions compared to yesterday morning.

At the same time, the price of 999 silver bars (1 tael) at Phu Quy Jewelry Group was listed at the threshold of 2.995 - 3.088 million VND/tael (buying - selling); down 27,000 VND/tael in both directions compared to yesterday morning.

The price of 999 silver ingots (1kg) at Phu Quy Jewelry Group is listed at 79.866 - 82.346 million VND/kg (buying - selling); down 720,000 VND/kg in both directions compared to yesterday morning.

World silver price

On the world market, as of 9:30 AM on March 16 (Vietnam time), the world silver price was listed at 80.47 USD/ounce; down 1.06 USD compared to yesterday morning.

Causes and forecasts

Spot silver prices opened the first session of the week with a slight downward trend after being under pressure in the previous session. This development mainly stems from a factor dominating market sentiment: the surge in crude oil prices, changing investors' expectations about inflation and interest rate policy.

Precious metals analyst James Hyerczyk of FX Empire believes that since military tensions between the US and Iran broke out, the energy market has become the main driving force leading psychology in financial markets.

Crude oil prices have risen by more than $30 per barrel, forcing precious metals traders - including silver - to re-evaluate the possibility that global interest rates could remain at a higher level for longer than expected," James Hyerczyk said.

James Hyerczyk added that for investors, oil price increases are not simply a matter of fuel costs. As energy becomes more expensive, the market often forecasts inflation will increase accordingly. This can spread to many important sectors of the economy such as transportation, manufacturing and agriculture.

According to him, higher inflation expectations make investors believe that central banks may have to maintain high interest rates longer to control prices.

James Hyerczyk believes that the sharp increase in oil prices also weakens expectations that the US Federal Reserve (Fed) will soon cut interest rates. Many forecasts suggest that in this week's meeting, the Fed is likely to keep the benchmark interest rate unchanged in the range of 3.50% - 3.75%.

Currently, the probability of interest rate cuts in June or July is below 50%. This makes September a time frame that the market assesses as more likely for the first interest rate cut.

Previously, many silver traders bet on a falling interest rate scenario to boost the long-term upward trend of this metal. But when the possibility of interest rate cuts was delayed, they were forced to adjust their strategy by reducing long-term buy positions" - James Hyerczyk said.

James Hyerczyk added that another factor putting pressure on silver prices is the strengthening of the USD and the increase in bond yields. Unlike stocks or bonds, silver does not generate periodic income such as dividends or interest rates.

So when yields on the financial market increase, cash flow tends to leave silver to shift to assets with better profitability" - James Hyerczyk said.