THE prices of silver and gold are running and attracting more and more investors in precious metals.
In fact, according to a Bloomberg analysis, bullion’s record-breaking rally may have grabbed headlines this year, but it’s the silver that is running faster and faster. In fact, this metal benefits from robust financial and industrial demand.
Silver is up nearly a quarter in 2024, overtaking gold and becoming one of the best-performing major commodities of the year. Strategists at Saxo Bank have declared that this could really be the year of metals by looking at the prices of the last few weeks. Their preferences fall on gold, copper and, indeed, silver.
Why does the price of silver rise?
Spot silver was traded on Friday, May 17th above $29 an ounceregistering a weekly gain of almost 5%. The next significant test, according to Bloomberg analysis, would be the $30 level, which it briefly surpassed in 2021. If the metal were to go above $30.1003 an ounce, that would push prices higher. prices at their highest in over a decade.
The white metal has already made progress against its cousin – as gold is considered – in relative terms. In January, the gold-silver ratio was above 90, the highest level since September 2022. Citigroup Inc. believes that if the Federal Reserve proceeds with interest rate cuts and economic growth remains strong in the second half, the ratio it could move to around 70, while warning that a slowdown would push it in the opposite direction.
Silver has a dual character, appreciated both as financial asset that how industrial input, especially in the clean energy technology sector. The metal is a key element for solar panels, and with strong growth in the industry, its use is expected to hit a record this year, according to the Silver Institute.
In this context, the market is heading towards a fourth year of deficit, with the silver deficiency of 2024 considered the second largest on record. Stocks tracked by the London Bullion Market Association fell to the second lowest level on record in April, while volumes on stock exchanges in New York and Shanghai were near seasonal lows.
According to TD Securities, LBMA inventories could run out over the next couple of years given the current pace of demand. According to Gregersen of Silver Bullion, “we will slowly see one reduction in supply because industrial demand is destined to rise. If investors start buying too, then I think in two or three months my biggest problem might end up being ‘Where do I find the offer?’ rather than ‘How do I sell silver?’”.
Gold, Silver and the Fed: What to Expect?
THE gold and silver prices have received strong boosts this year, and strategists say precious metals could continue to catch up new record highs in the coming months.
On Wednesday 15 May, for example, precious metals prices received a major boost after weaker-than-expected US inflation data strengthened the short-term outlook for rate cuts by the Fed.
Gold prices stood at their highest level in more than three weeks, while silver hit its highest level in more than three years. Saxo Bank strategists said in a recent research note that bullion could soon test the $2,400 level and silver could rise to $30.
Gold prices, like silver, tend to have a inverse relationship with interest rates. A higher interest rate environment usually hurts demand for gold and silver since precious metals do not pay interest, making them less attractive than investments that do, such as bonds. In view of an easing of monetary policy, forecasts are for government bond yields and the dollar to decrease and therefore a rise in gold and silver.
