FX.co ★ Silver prices to fall to $21

The Federal Reserve's inevitable move to raise interest rates by 50 basis points next week continues to affect precious metals.Silver prices have fallen below $26 in the last two weeks. UBS analysts are forecasting even more price declines in the near future.In a report by the bank, UBS market strategists Dominic Schneider and Wayne Gordon said the prospect of higher interest rates is likely to remain a headwind for the metal.The Swiss investment bank is negative on the silver outlook as the Federal Reserve tries to get inflation under control by aggressively raising interest rates. It is expected that interest rates could rise significantly before the end of 2022.Elevated inflation rates in the USA are a problem which requires the full attention of the Fed. Accordingly, expectations of real interest rates could rise.It is assumed that, by the second half of the year, not only will interest rates rise, but also inflationary pressures will begin to ease.With real interest rates rising in the coming months and actual inflation flattening, as well as economic growth slowing down, the backdrop for the silver price rally is weakening.As a result, inflows into silver ETFs are forecast to stop.For silver prices this means that a move downwards is likely to follow in Q2. Then the price of the metal will approach $21 per ounce.