Silver price and gold both mark highest levels since 2014
New Yoirk (July 5) Silver and gold futures rallied to their highest levels since 2014 on Tuesday, as lingering post-Brexit economic uncertainty underpinned the relative safety of haven investments, including silver and gold.
September silver SIU6, +2.21% gained 31.9 cents, or 1.6%, to settle at $19.907 an ounce after hitting highs above $20. The settlement was the strongest since August 2014. Prices saw a 10.1% gain last week, the largest since August 2013, according to FactSet data.
August gold GCQ6, +1.48% gained $19.70, or 1.5%, to end at $1,358.70 an ounce after tacking on 1.3% last week. Prices marked their highest settlement since March 2014, FactSet data showed.
“All of us are slightly open mouthed at the strong rises in both gold and in particular silver, of late,” said Julian Phillips, founder of and contributor to GoldForecaster.com, in a recent note. “The prime reasons for the rises are that both their technical pictures have moved out of the consolidation area into ‘new territory’ [and] silver’s breakout is clearer than gold’s at this moment.”
‘All of us are slightly open mouthed at the strong rises in both gold and in particular silver.’
Julian Phillips, GoldForecaster.com
“Over the coming weeks and months the ramifications of ‘Brexit’ on the global economy will give us a measure of just how much of a Teutonic shift in the world economy it was,” he said. “The most visible impact has been a lowering of the expectations for interest rates and the heightened economic risks to the world.” Both of those situations help buoy the investment appeal of precious metals.
But at least one analyst questioned if silver’s move had come too far, too fast, and was possibly driven by unusual factors, including thin volume surrounding the U.S. Independence Day holiday. U.S. markets were closed Monday.
“The metals may be taking a breather before the next leg, but I remain skeptical, especially on silver,” said Peter Hug, Kitco Metals global trading director, in a blog post. “It appears that the $3 move on silver from the $18.50 level last Thursday to $21.20 over the weekend was likely a large commercial that decided or was forced to cover a short position…”
“Given that global growth remains anemic, I believe it remains premature to justify silver’s ascent relative gold,” Hug added. “I think the [silver-to-gold] ratio is better justified around the 72:1 level, which at current prices, suggests silver should be in the $18.75 range.”
On Tuesday, gold and silver gained even as a broad measure of the dollar’s strength also improved; the dollar and precious metals often move inversely but have snapped that pattern in many of the trading days since the late-June referendum that gave the thumbs-up for the U.K. to pull out of the European Union, a so-called Brexit.
The ICE U.S. dollar index DXY, +0.73% gained 0.4% as the pound GBPUSD, -1.9490% continued its dive against its U.S. counterpart. Most European shares fell and U.S. equities also declined, helping to explain some of the continued demand for gold and silver away from riskier assets.