The recent surge in gold prices, surpassing $2,200 an ounce, has captured significant attention. However, market analysts are now turning their focus to silver, anticipating the grey metal to be the next to rally.
Historically, silver has outperformed gold in both bear and bull markets due to its higher volatility. While silver tends to face more significant downward pressure compared to gold, it often lags in attracting investor interest during upward movements.
As of the latest data, May silver futures traded at $24.40 per ounce, down more than 1.2% on the day. Concurrently, April gold futures last traded at $2,168.90 an ounce, down 0.95% on the day. The gold/silver ratio, currently above 89 points, indicates that it takes 89 ounces of silver to equal one ounce of gold, well above the historical average of around 60 points.
Carley Garner, co-founder of brokerage firm DeCarley Trading, acknowledged silver’s volatility but expressed optimism about its potential. While she doesn’t rule out record highs, she sees prices moving above $30 an ounce when momentum picks up. Garner noted that silver has a historical pattern of being late to rally after gold makes its move, suggesting that a similar scenario could unfold again.
Dennis Gartman, a renowned commodity trader, attributed silver’s underperformance to shifting market dynamics. He highlighted the strong support for gold from unprecedented central bank demand, which silver lacks. Gartman emphasized that silver typically leads gold in a bull market, expressing hope that a rally in silver would further strengthen bullish momentum in gold.
Analysts have often linked silver’s potential bull market to the health of the global economy. Marcus Garvey, head of commodities strategy at Macquarie, suggested that silver could outperform gold if the global economy remains strong. He emphasized the dual nature of silver as both a precious and industrial metal, noting that improved global growth could turn silver into a relative outperformer in the third and fourth quarters of the year.
Fawad Razaqzada, founder of Trading Candles, believes that silver’s breakout beyond $30 and a potential push to $50 an ounce might be imminent. He anticipates an economic rebound in China to boost silver’s industrial demand, providing solid support in the marketplace. From a technical perspective, Razaqzada highlighted crucial support levels and resistance points, emphasizing the importance of surpassing $25 and $26 for a potential upward movement towards $30.
As the focus turns to silver, analysts are closely monitoring economic indicators, global dynamics, and technical patterns to gauge the metal’s future trajectory in the market.
