The spotlight is on silver today as the precious metal surges to $30 per ounce, notching a potential highest closing price unseen in over a decade. Silver futures have seen an upward spike of over 6%, bringing the value to approximately $31 per ounce.
In 2021, silver did touch the $30 per ounce mark briefly in intraday trading, but it hasn’t sealed the day above this level since the turn of the decade.
The sudden swell in silver prices could be attributed to various factors. Among those are possible indications of a slowdown in inflation, the prospect of falling interest rates, the recent meme stock hysteria, and the overall financial and industrial resilience.
Furthermore, silver prices have likely been amplified due to the lack of sufficient supply. In fact, 2024 marks the fourth consecutive year of a silver deficit, with this year turning out to be one of the most severe on record.
Silver has remained robust throughout this year. The metal has witnessed a rise of 30% year-to-date (YTD). Still, it continues to be historically cheaper than gold. It would take approximately 80 ounces of silver to buy an ounce of gold, which is considerably higher than the average 20-year ratio of 68:1.
This year has also seen a significant rise in gold prices. Gold futures have surged about 17% YTD. As recently as last month, gold prices attained an all-time high of around $2,431 per ounce, after which it dipped slightly to the current price of $2,415 per ounce.
The future of metal prices seems promising, according to some. JC O’Hara, Chief Technical Strategist at ROTH Capital, feels that the price of gold appears set to surge higher and shatter the recent highs made in April.
“Now appears poised to move higher and break out of the recent highs made in April,” said O’Hara. “We can set a technical upside price target to $2,600.”
O’Hara also said, “if silver prices can move above $30, silver will have little resistance until the $35/$37 area.”
The correlation between metal prices and interest rates have been historically inverse. So it’s no surprise that the mild inflation data, which bolsters the case for rate reductions this year, is causing a spike in the prices of metals.
The continuance of this rally might depend on favorable inflation data in the upcoming months and advanced signs of future rate reductions.
As of the date of publication, Shrey Dua holds no position, either directly or indirectly, in the securities mentioned in the article. The views expressed are those of the author.
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