Silver prices catching up to gold; testing critical resistance above $29

Silver has struggled to keep pace with gold during its surge to record levels, but sentiment is slowly starting to shift. The grey metal is beginning the new trading week with a push above $29 per ounce, its highest level in four weeks.

Spot silver last traded at $29.34 per ounce, up more than 1% on the day.

The new momentum is helping to decrease the gold/silver ratio, which had rallied significantly since early July. The gold/silver ratio is currently trading at 85.5 points, down sharply from last week’s high of around 90 points.

Christopher Lewis, senior market analyst at FXEmpire, said in a note on Monday that he expects silver’s upward momentum is just beginning, and any selling pressure should be viewed as a buying opportunity.

“In general, this is a market that I think will continue to experience a lot of volatility, but I still believe that the overall trend favors the upside,” he stated in the note.

Joaquin Monfort, a market analyst at FXStreet.com, identified some near-term resistance at $29.23 per ounce. However, he added that if the current momentum persists, he expects prices to rise back above $30 per ounce.

Unlike gold, silver has been unable to maintain consistent bullish momentum in the current market environment. Some analysts point out that this is due to its sensitivity to the global economy, given its industrial demand. While lower interest rates would support silver as a monetary metal, the threat of an economic slowdown could keep investors cautious.

However, analysts have noted that even in an economic downturn, the silver market faces a significant supply and demand imbalance, which is expected to continue supporting higher prices.

According to the Silver Institute, the market is expected to see a deficit of 215.3 million ounces this year, the second-largest deficit in more than two decades.

In this context, Daniel Hynes, senior commodity strategist at ANZ, said he expects silver to catch up to gold.

“Strong fundamentals amid rising gold prices are likely to spur investor interest in silver,” Hynes said.

Despite silver’s recent struggles, many analysts anticipate solid price gains this year. Last month, commodity analysts at Bank of America predicted that the gold/silver ratio will fall to 75 points by the end of the year. The bank expects prices to average around $28 this year.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com