Gold Takes a Breather, Silver: It’s My Turn to Shine!

It's My Turn to Shine!
Published on: Apr 15, 2024

After failing to hold above the key milestone of $2,400 per ounce, the gold market has shown signs of consolidation this week, with June gold futures trading mostly flat around $2,375. However, silver prices surged over 1% today. Silver has “awakened” and started to outperform gold, indicating a new trend in the recent precious metals market.

Last Friday, silver prices closed at $28.33 per ounce, nearing $30 for the first time since May 2021 during intraday trading, marking an almost 18% increase year-to-date. On Monday, silver prices continued to rise to $28.905, expanding the year’s gain to 20%. In comparison, gold prices have risen 15.8% so far this year, lagging behind silver.

In addition, the silver ETF iShares Silver Trust (SLV) rose 3% to $26.41 on Monday, marking a 21.3% increase year-to-date. The gold ETF iShares Gold Trust ETF (IAU) also rose 1.9% today, extending its 2024 gain to 15.6%.

The rise in silver prices this year can be attributed to several factors:

  • Sticky inflation preventing the Federal Reserve from cutting interest rates.
  • Continued growth in global silver (and other precious metals) demand, while global production remains stable or even declining.
  • Hedging interest from investors, especially in India and China, under geopolitical risks.

Silver prices rose 4% last week and have surged 13.7% since April, probably driven by the last factor. Concerns about the potential escalation of the Middle East situation triggered a surge in gold, silver, and platinum purchases last week.

Precious metal mining stocks also rose, with the Global X Silver Miners ETF (SIL) tracking silver miners rising 22.5% since the end of February. Coeur Mining Inc (NYSE:CDE) has risen 42% this year, while Hecla Mining Co (NYSE:HL) has risen 12.7%.

In a report released on Monday, senior commodity strategist Daniel Hynes and his team at ANZ Bank expressed the view that silver prices still have significant upside potential, expecting silver to surpass $31 by the end of 2024, while gold prices are forecast to approach $2500. Their analysis is based on key market drivers, with interest rate cuts and US dollar depreciation yet to materialize. Furthermore, analysts also anticipate the gold-silver ratio to return to a normal level of 80 by the end of the year. This ratio reached a high of 91 in February 2024, and today has significantly dropped to 82, the lowest since early December.

Both gold and silver possess dual attributes as currencies and commodities, with gold having a stronger currency attribute and silver leaning towards being a commodity. Therefore, some analysts point out that the diminishing geopolitical risks will reduce the safe-haven demand for gold. Conversely, global economic growth will boost industrial demand for silver, combined with ongoing supply tightness and slowing production growth, maintaining a structurally tight market, which will drive silver to continue outperforming gold in the near future.

Gold Interest Rate Precious Metals Silver