Silver's Momentum Burst Drives Best Three-Week Rally in a Year

Gold Benefits From Risk-On Sentiment Change: Yardeni
  • Prices could rally to $20/oz in near term, Deutsche Bank says
  • Gold-to-silver ratio has dropped to the lowest since October

Silver is having a run for the record books.

Futures capped the biggest three-week advance in more than a year, days after the start of a bull market for the metal with a reputation for being gold’s more volatile cousin. Prices have rallied more than any other metal this year after three straight annual losses. Assets in exchange-traded funds are near a record high.

“We think momentum could carry silver,” Deutsche Bank AG analysts including Grant Sporre wrote in a research report on Friday. The metal “tends to be a late-cycle play in the precious metals.”

Silver futures for July delivery settled at $16.95 an ounce at 1:44 p.m. on the Comex in New York, taking this week’s gain to 3.9 percent. The metal fell 1.1 percent on Friday. Prices have climbed almost 13 percent since April 1, the steepest three-week climb since January 2015, and are up 23 percent this year.

The precious metal may approach $20 an ounce in the near term, according to Deutsche Bank. Some analysts have said prices are simply catching up to the rally in gold earlier this year, while others point to expectations for faster economic growth, which benefits silver because it has more industrial uses than gold.

“We’re starting to get better demand news coming out of emerging markets,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “I think the big funds, the smart money, the big traders are jumping all over it because it’s rising.”

Silver has outperformed gold in nine of the past 11 trading sessions. Gold futures for June delivery slipped 1.6 percent to $1,230 an ounce on the Comex. In the spot market, the gold-to-silver ratio, has fallen to 72.7, poised for the lowest since October. Holdings in ETFs backed by silver rose for a fourth day to 19,962.2 metric tons, according to data compiled by Bloomberg as of Thursday.

  • On the New York Mercantile Exchange, platinum and palladium declined.
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