Silver price trails gold on economic optimism

Thursday, May 01, 2014

Spot silver prices declined for the third straight session yesterday, closing 1.3% lower as the metal trailed the recent softening in gold prices on renewed economic optimism. Haven appeal for both gold and silver has deteriorated rapidly in recent sessions and despite improving fundamentals for silver, which has seen stable demand growth particularly for industrial applications, the metal breached tentative support around $19.30/oz earlier this week with prices this morning dropping towards $19.00/oz.

Prices have declined almost 25% from the 12 month high of $25.10/oz seen in August last year as investor sentiment dominates market activity and with gold prices heading lower on fresh hopes for stronger US growth the rout in silver has been exacerbated. GFMS demand statistics show appetite for silver has remained firm throughout the first four months of the year, with demand from industrial applications recovering well in 2013 but for now it seems that sentiment driven investors and key macro data is firmly in control. Short term, any breach of the recent low at $18.95 could pave the way for protracted declines towards the 12 month low of $18.22 as investors rotate out of precious metals safe havens and back into equity markets.

Spot silver prices extend declines as investors pull out of precious metals... 

XAG Curncy Silver Spot Oz 2014 05 01 10 44 57

...despite stronger demand from industrial applications

GFSDINAP Index GFMS Ltd Silver 2014 05 01 10 34 53

Topics: Gold, Silver
More from: Kash Kamal