Silver jumped to the highest in almost seven years and gold continued its march toward a record on expectations there will be more stimulus to help the global economy recover from the COVID-19 pandemic.
Investors have flocked to the metals on surging demand for havens amid a resurgence in virus cases, slowing growth, a weaker US dollar and negative real interest rates in the US.
The vast amounts of stimulus unleashed by governments and central banks have also aided prices and, after the success of a European package this week, focus turns to negotiations on legislation to prop up the US economy.
Silver’s surge has been getting an added boost from supply concerns and optimism about a rebound in industrial demand.
Holdings in exchange-traded funds (ETFs) backed by the metal are at a record, while gold ETFs on Tuesday rose the most since the middle of last month and also sit at the highest ever.
“Like gold, silver has benefited this year from safe haven demand and falling long-term US real yields,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note. “A sustained rally in silver can continue, particularly when demand hopes and supply concerns are added to the mix.”
Spot silver climbed 7.2 percent to US$22.8366 an ounce, the highest since 2013, before paring some of the gains to trade at US$21.81 by 10:43am in London yesterday.
Gold for immediate delivery rose as much as 1.3 percent to US$1,865.81 an ounce, the highest since September 2011, before paring some of its gains. A gauge of the US dollar is near the lowest since March.
Chinese silver and gold stocks rose, including a more than 30 percent jump for China Silver Group Ltd (中國白銀集團) in Hong Kong.
Silver should continue to gain due to its use in industrial applications, such as solar cells, in addition to a raft of factors that are spurring other precious metals higher, Citigroup Inc global head of commodity research Ed Morse said yesterday.
Citi has previously said that the metal tends to perform very strongly when the desire for wealth protection is high and economic activity is improving.
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