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(Kitco News) – The gold market may be struggling to find enough bullish interest to push prices into new territory above $ 1,800, but that hasn’t stopped silver from bringing in fresh momentum.
Ole Hansen, head of commodity strategy at Saxo Bank, said in a report on Tuesday that the silver market kicked off the week with its best day since early February, with prices hitting a two-month high above $ 27 an ounce.
Hansen added that Monday’s silver price move was a critical technical breakout for the precious metal. While silver fell from Monday’s high, Hansen said it was still holding above important support after its break. Silver futures for July last traded at $ 26.97 an ounce, relatively flat during the day.
Meanwhile, gold prices fell from Monday’s nine-week high. June gold futures were last traded at $ 1,787.90 an ounce, down 0.22% on the day.
“Silver showed what it was capable of earlier when it found momentum. However, it first needs to confirm the support level below around 26.60, ”Hansen said in a comment to Kitco News.
Hansen added that silver is attracting renewed investor interest as industrial demand for the precious metals continues to rise.
“Rising growth expectations, coupled with the promise of government-backed infrastructure plans, as well as a focus on green transformation and reflation, have all contributed to a strong rally in industrial and platinum group metals in 2021. Silver is caught between two chairs. The market is struggling to understand whether the influence of industrial metals should have more impact than the fight against gold, ”he said in a note on Tuesday.
“The renewed growth in demand for industrial metals can be seen through the gold / silver ratio, which has been on a downtrend over the past month. From more than 70 ounces of silver to one ounce of gold on April 1, it has since dropped to a seven-week low of 66.5, ”he added.
Sentiment in the silver market is strikingly different from sentiment in the gold market, as the yellow metal cannot break the $ 1,800 an ounce mark. Hansen said gold’s unsuccessful breakout is frustrating and confusing for many traders.
Hansen told Kitco News last week that he is neutral about gold; however, he added that he still sees the potential for gold prices to eventually break out of the current consolidation pattern.
“The near-term technical outlook still looks promising above $ 1,765, and a break above $ 1,800 could signal a move towards $ 1818 and $ 1833, an area that will no doubt begin to sway the long trend after short positions,” he said.
As for what will drive gold prices up, Hansen said he continues to monitor historically low real bond yields and higher break-even rates in bond markets. He added that the new momentum in silver could push the price of gold higher.
“If silver goes up, I think gold will follow like a screaming child who doesn’t want to let go of his TikTok,” he said.
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