Silver scores biggest monthly gain in 9 years as US-China tensions boost gold prices

May 31, 2020

New York (May 31)  Silver futures on Friday posted a gain of nearly 24% for the month, the largest since 2011, with the industrial metal finding support as global economies continue to reopen from pandemic-related shutdowns.

Gold futures, meanwhile, rose for Friday’s session buoyed by U.S.-China tensions and global monetary stimulus measures.

“COVID-19 and the economic fallout that followed has clearly impacted” industry/technology and jewelry demand, with “75% of the global silver demand...dependent on the consumer who has been either temporarily or permanently wounded by the downturn,” said Steven Dunn, head of exchange-traded funds at Aberdeen Standard Investments, in emailed commentary.

“Unlike gold, silver may get a boost as major economies ease coronavirus-linked restrictions which will only fuel hopes of an economic recovery,” he said.

On Friday, July silver SIN20, -0.07% picked up 53 cents, or 3%, to end at $18.499 an ounce, retaking a psychologically significant level above $18. for the month, it gained nearly 24%, which was the best monthly performance since April 2011, according to Dow Jones Market Data.

“Silver’s rampage continued on a near uninterrupted basis throughout the month of May,” said Ryan Giannotto, director of Research at GraniteShares. “While silver is one of the more volatile metals, after a 20% monthly gain on the back of a 6% gain in April, trend exhaustion may be approaching.”

Meanwhile, August gold GCQ20, -0.49% GC00, -0.49% rose $23.40, or about 1.4%, to $1,751.70 an ounce. Gold tacked on 3.4% for the month.

“Gold enjoyed one of its steadiest months of return in May,” Giannotto told MarketWatch. Even with the market optimism surrounding reopening, gold saw a gain, “underlying the precious metal’s all-weather investment characteristics.”

“Tensions surrounding Hong Kong’s autonomous status are in clear focus for gold’s next movements, with potential for not only a weakened dollar but also a heightened safe-haven demand,” he said. “This scenario would represent a two-fold gain for gold.”

As of 2 p.m. Eastern Friday, traders were awaiting a news conference from President Donald Trump. His expected remarks would come after the U.S., Australia, Canada and the U.K. governments issued a joint statement Thursday reiterating their “deep concern regarding Beijing’s decision to impose a national security law on Hong Kong,” after China’s parliament, the National People’s Congress passed legislation Thursday that could greatly curtail democratic freedoms.


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