Gold and silver are rallying Monday along with stocks, with silver prices surging past recent resistance to score close to a one-year high, as the metal approaches levels not seen since September.
Buying interest in both precious metals appears to be driven by uber-bullish technical chart aspects as well as lingering fears over the coronavirus pandemic and simmering geopolitical concerns. August gold futures hit $1818 Monday, looking to challenge the $1829.80 level reached last week. Meanwhile, September Comex silver prices rallied to $19.775, and appear to be headed higher as of 1 pm EST.
Florida released data showing there were 15,299 new coronavirus cases on Sunday, the highest single-day total for any U.S. state, including New York at its worst since the pandemic commenced.
Despite investor complacency regarding the virus, the U.S. has reported over 60,000 new cases daily for the last three days in a row now, driving the national tally to over 3 million cases, according to data from Johns Hopkins University.
“COVID remains a huge problem w/cases, hospitalizations, and fatalities all climbing,” Vital Knowledge founder Adam Crisafulli said in a note on Sunday. “The market continues to absorb all this information relatively well and this seems to be a function of vaccine hopes, lower fatality rates vs. Mar/April, the avoidance of wholesale lockdowns, and the lack of a resurgence in the Northeast (esp. NYC).”
While they are often disconnected or uncorrelated with stocks, gold and silver are rallying in sync with equities, impressing market bulls with the metals’ ability to rally in the face of rising stock markets. Global economies could mean increased consumer demand for gold and silver, especially from key consumers like China and India.
Strategists at Credit Suisse have observed robust silver performance lately and project the industrial metal to target $26.22 resistance on a break above $21.14. In addition, the closely watched Gold/Silver ratio shows silver is its own target to outperform.
“Silver continues to push its way higher and there are seen clear similarities between price action now and that of gold last year. However, only above 19.65/21.14 would see a multi-year base confirmed, with next resistance then seen at $26.22,” the strategists said.
“The Gold/Silver ratio is also back pressuring price and retracement support, beneath which would suggest silver can extend its current outperformance. At present though, this is still a correction within the longer-term gold outperformance trend,” they added.
Other analysts are supportive of silver’s move higher as well.
“[Silver] could continue to outperform — benefiting from both the positive precious metals environment and its industrial characteristics, at a time when its supply may remain constrained. In fact, we expect the silver market to operate at full or even above full utilization as recent volatility in the EFP has created a disincentive for market participants to rid themselves of physical silver,” TD Securities commodity strategists write. As prices head higher, continued CTA buying could lead to even more gains. “We see a fat right tail in silver,” the strategists say.
ETF investors looking to get in on the silver action can look to funds like the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver, which are up more than 3% Monday.
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