Gold closed at a fresh, uncharted territory on Friday, with a remarkable 3% surge over the week, propelling it to a new record high at the Asian open overnight. Silver also concluded the week positively, despite the US dollar securing a third consecutive weekly gain against a basket of foreign currencies.
The strong demand for precious metals throughout March, particularly gold, led to several record highs. Gold gained approximately $190 last month, while silver witnessed a more modest increase of $2.29. However, in terms of percentage gains, silver outperformed gold, demonstrating a growth of just over 10% compared to gold’s slightly over 9%.
Investor interest in precious metals has been fueled by persistent high inflation rates eroding the value of fiat currencies, a trend mirrored in the surging value of Bitcoin. Expectations of interest rate cuts by major central banks, including the Federal Reserve (Fed) in June, have further contributed to the rally. The Fed’s Chair, Jerome Powell, indicated a favorable outlook on recent US inflation data, reinforcing market expectations of upcoming rate reductions.
Optimism surrounding a potential recovery in Chinese demand has also bolstered precious metal prices, with recent data indicating improvements in the world’s second-largest economy. The ongoing geopolitical tensions and momentum-driven trading have further supported the bullish trend.
While gold has consistently reached new record highs, silver has yet to experience a similar breakout. However, signs suggest that silver is poised for a significant upward movement. Despite remaining in a consolidation phase since the peak of the pandemic in 2020, silver has maintained above crucial support levels, indicating potential for a breakout. Technical analysis suggests that silver could not only reach previous highs but also exceed them, potentially soaring towards its all-time high near $50.
On the daily chart, silver has demonstrated resilience above key moving averages, signaling short-term bullish sentiment. Despite a recent retracement, silver has consolidated around critical support levels, presenting an opportunity for upward movement.
In conclusion, the current market conditions, fueled by inflationary pressures and anticipation of central bank actions, present a favorable environment for precious metals. While gold continues to reach unprecedented highs, silver appears poised for a breakout, offering potential for significant gains. Investors are advised to conduct thorough research and analysis before making investment decisions in these volatile markets.
