Strong uptick in silver prices catches attention of investors

Chart of Gold  Silver Ratio London daily benchmarks. Source Bullion Vault via LBMA

On Thursday, silver was trading at $22.79 per ounce in the worldwide market, while its spot price in India was at Rs 60, 586 per kg.

On the MCX, too, August futures of gold rose as high as Rs 50,085, but cooling down to Rs 49,747 (until 6.30 pm IST). "The safe-haven investment demand further went up as US President Donald Trump has said the coronavirus situation could worsen before it gets under control", he added. However, the increase in prices has further dampened the domestic gold jewellery demand, which is already at a historic low.

Gold prices today hit a fresh all-time high of Rs 50,021 per 10 grams, backed by positive trends in global rates, coupled with a weaker dollar.

By 2:03 p.m. EDT (1803 GMT) spot gold jumped 1.3% to $1,865.61 per ounce, while US gold futures closed 1.2% higher at $1,865.1 per ounce.

A new record high for gold against the United States dollar is expected "in the coming weeks", helping to complete the set with gold prices already at record highs against all other G8 currencies, Michael Hewson, chief analyst at CMC Markets UK, said.

Edward Morse, global head of commodity research at Citi, said he thinks gold prices are likely to hit unprecedented levels in the next six to nine months. "Improved risk sentiment and weaker U.S. dollar has benefited industrial metals as well". In fact, gold prices have gained by ₹1,295 from ₹48,886-level logged on July 1.

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Meanwhile, "silver has rallied sharply in last few sessions as it has benefitted from concurrent gains in gold and industrial metals and strong investor buying", Kotak Securites said.

Lower returns on bonds have made it more attractive to hold gold and silver, and investors are stockpiling both in the hope they will hold their value as central bank stimulus unleashed during the pandemic erodes other assets.

"The gold prices are rising on sustained concerns over coronavirus and huge amount of liquidity infusion in the market to tackle the pandemic-induced slowdown".

In the futures market, gold touched an intraday high of Rs 50,707 and a low of Rs 50,125 on the Multi-Commodity Exchange (MCX).

"Gold has managed to break through the $1,818 mark this week, as this precious metal pushes into a fresh eight-year high on the way to the [September 2011] $1,921 record high", London-based IG senior market analyst Joshua Mahony said yesterday.

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