Gold continues to captivate investors, with prices reaching new all-time highs of around $2,500 per ounce. Yet, attention is now shifting towards silver, which has shown signs of emerging from its shadow.
Silver has struggled to match gold’s performance during the latter’s record surge, but recent trends suggest a turnaround. As of the start of the new trading week, silver has gained traction, pushing above $29 per ounce, marking its highest level in four weeks. Spot silver was last reported at $29.34 per ounce, reflecting a rise of over 1% on the day.
This uptick in silver’s price is contributing to a decline in the gold/silver ratio, which had significantly increased since early July. The ratio now stands at 85.5 points, a notable drop from last week’s peak of around 90 points.
Christopher Lewis, a senior market analyst at FXEmpire, believes that silver’s upward momentum is just beginning. In a note on Monday, he advised that any current selling pressure should be seen as an opportunity to buy, forecasting continued volatility but overall upward movement in silver prices.
Joaquin Monfort, a market analyst at FXStreet.com, highlighted a near-term resistance level for silver at $29.23 per ounce. However, Monfort anticipates that if the current positive momentum continues, silver prices could surpass $30 per ounce.
Despite gold’s consistent bullish trend, silver has faced challenges in maintaining similar momentum. Analysts attribute this to silver’s dual role as both a monetary metal and an industrial commodity, making it sensitive to economic fluctuations. While lower interest rates typically benefit silver, concerns about a potential economic slowdown have kept some investors cautious.
Nonetheless, silver’s market dynamics reveal a significant supply and demand imbalance. The Silver Institute forecasts a substantial deficit of 215.3 million ounces this year, marking the second-largest deficit in over two decades. This supply shortfall, combined with strong fundamentals, is expected to support higher silver prices.
Daniel Hynes, senior commodity strategist at ANZ, predicts that silver will eventually catch up to gold. “Strong fundamentals amid rising gold prices are likely to spur investor interest in silver,” Hynes commented.
Despite recent challenges, many analysts are optimistic about silver’s prospects for the year. Commodity analysts at Bank of America have projected that the gold/silver ratio will decline to 75 points by the year’s end and anticipate that silver prices will average around $28 for the year.
