Analysts expect gold’s premium over silver to decline in the short-term as the yellow metal approaches its peak for the year.
This article was written by Evdokia Pitsillidou, who is a Risk Management Associate at easyMarkets. She specialises in commodities, options and currencies.
Silver futures have risen dramatically in April, as the combination of improved investor sentiment, a weak dollar and stronger Chinese data continue to support the grey metal.
Silver for May delivery closed up 8 cents or 0.5% at $16.98 a troy ounce Friday, April 22. Silver futures closed at $17.18 earlier in the week, which was the highest settlement on the Comex division of the New York Mercantile Exchange since last May.
The grey metal, which has gained nearly 10% in April, has experienced higher demand throughout the year. Silver futures are up 23% year-to-date, outperforming gold by a significant margin. Gold futures settled down more than $20 at $1,230.00 a troy ounce Friday after trying for one-week highs.
The gold-silver ratio, an important indicator of the precious metals’ relative value to one another, has declined significantly in April. The ratio closed down nearly 6% at 72.72 on Friday. This essentially states that the price of gold is around 72.72 times the price of silver. The ratio was as high as 83.5 in early March.
Analysts expect gold’s premium over silver to continually decline in the short-term amid growing signs that the yellow metal is approaching its peak for the year. Additionally, silver is benefiting from improving factory data out of China, which is the world’s biggest consumer of base metals.
China’s gross domestic product expanded 6.7% annually in the first quarter, the weakest rate of growth in seven years. However, government PMI data has shown sustained improvement in the country’s manufacturing sector. China’s official manufacturing purchasing managers’ index improved to 50.2 in March from 49 in February on a scale where 50 separates expansion and contraction.
A weak US dollar has also underpinned the latest rally in precious metals. The dollar index, which tracks the performance of the US currency against a basket of six peers, has declined nearly 4% since the start of the year and was recently seen trading near six-month lows.
A slowing US economy and financial market instability have forced the Federal Reserve to delay raising interest rates. Fed Chairwoman Janet Yellen confirmed last month that the central bank would adopt a cautious approach to policy normalization, which effectively rules out a rate-hike before mid-2016. According to the CME FedWatch Tool, the Fed is unlikely to raise interest rates before the November presidential election. As such, loose monetary policy will likely keep a lid on dollar gains, which could help silver extend its recent rally.
However, analysts at Goldman Sachs have warned that the latest rally in commodities, which includes precious metals and energy, is not backed by fundamentals.
“While this recent rally has the potential to run further to the upside ... we believe that it is not yet driven by a sustainable shift in fundamentals,” Goldman analysts said in a note released on April 22, as quoted by Reuters.
They added: “Given the near-term and temporary nature of the current re-balancing and the lack of longer-term sustainable deficits in any of the markets, it is premature to embrace these 'green shoots' and shift to an 'overweight' recommendation in commodities.”
Commodities experienced a large selloff last year, as a combination of slowing Chinese growth and market imbalances weighed on investor sentiment.
This article was written by Evdokia Pitsillidou, who is a Risk Management Associate at easyMarkets. She specialises in commodities, options and currencies.
Silver futures have risen dramatically in April, as the combination of improved investor sentiment, a weak dollar and stronger Chinese data continue to support the grey metal.
Silver for May delivery closed up 8 cents or 0.5% at $16.98 a troy ounce Friday, April 22. Silver futures closed at $17.18 earlier in the week, which was the highest settlement on the Comex division of the New York Mercantile Exchange since last May.
The grey metal, which has gained nearly 10% in April, has experienced higher demand throughout the year. Silver futures are up 23% year-to-date, outperforming gold by a significant margin. Gold futures settled down more than $20 at $1,230.00 a troy ounce Friday after trying for one-week highs.
The gold-silver ratio, an important indicator of the precious metals’ relative value to one another, has declined significantly in April. The ratio closed down nearly 6% at 72.72 on Friday. This essentially states that the price of gold is around 72.72 times the price of silver. The ratio was as high as 83.5 in early March.
Analysts expect gold’s premium over silver to continually decline in the short-term amid growing signs that the yellow metal is approaching its peak for the year. Additionally, silver is benefiting from improving factory data out of China, which is the world’s biggest consumer of base metals.
China’s gross domestic product expanded 6.7% annually in the first quarter, the weakest rate of growth in seven years. However, government PMI data has shown sustained improvement in the country’s manufacturing sector. China’s official manufacturing purchasing managers’ index improved to 50.2 in March from 49 in February on a scale where 50 separates expansion and contraction.
A weak US dollar has also underpinned the latest rally in precious metals. The dollar index, which tracks the performance of the US currency against a basket of six peers, has declined nearly 4% since the start of the year and was recently seen trading near six-month lows.
A slowing US economy and financial market instability have forced the Federal Reserve to delay raising interest rates. Fed Chairwoman Janet Yellen confirmed last month that the central bank would adopt a cautious approach to policy normalization, which effectively rules out a rate-hike before mid-2016. According to the CME FedWatch Tool, the Fed is unlikely to raise interest rates before the November presidential election. As such, loose monetary policy will likely keep a lid on dollar gains, which could help silver extend its recent rally.
However, analysts at Goldman Sachs have warned that the latest rally in commodities, which includes precious metals and energy, is not backed by fundamentals.
“While this recent rally has the potential to run further to the upside ... we believe that it is not yet driven by a sustainable shift in fundamentals,” Goldman analysts said in a note released on April 22, as quoted by Reuters.
They added: “Given the near-term and temporary nature of the current re-balancing and the lack of longer-term sustainable deficits in any of the markets, it is premature to embrace these 'green shoots' and shift to an 'overweight' recommendation in commodities.”
Commodities experienced a large selloff last year, as a combination of slowing Chinese growth and market imbalances weighed on investor sentiment.
Cheetah Fund Investors Lose $9 Million in Alleged Fraudulent Scheme
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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