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Gold and Silver ETFs Expand, Ratio Falls to 2023 Low as Stock Market and Bitcoin Rally 'At Odds' with US Fed

GOLD held firm and the silver price rose against a weaker Dollar on Thursday ahead of key inflation data, but both precious metals retreated against most other major currencies as the US revised down last year's GDP growth and reported a rise in claims for jobless benefits.
Western stock markets rose and so-called crypto currency Bitcoin touched 9-month highs.
Betting grew that the Federal Reserve will raise its key interest rate yet again at start-May, but the US central bank will then start cutting rates before Christmas according to 97.6% of futures contract positions tracked by the CME derivatives exchange's FedWatch tool.
"Stated Fed policy remains at odds with what Fed Funds [traders] are expecting," says precious-metal analyst Rhona O'Connell, noting the clear anti-inflation stance in last week's Fed announcement.
Ahead of tomorrow's US inflation data – expected by analysts to show the core PCE index repeating January's 4.7% annual increase last month – "This is a massive week for economic data from the United States," O'Connell adds, "and that has led to gold essentially trading in a holding pattern."
As gold in Dollars continued to trade above $1965 per ounce while silver briefly touched $23.90 – a new 8-week high – the US currency fell 0.5% on its trade-weighted forex index.
Euro gold in contrast dipped through €1800 and the UK gold price in Pounds per ounce slipped 0.4% to £1587, also trading at the bottom of the last 2 weeks' range.
Silver also erased previously strong weekly gains for non-Dollar traders outside of the Japanese Yen, dropping 1.8% for UK investors mid-afternoon in London to £19.00 and losing 1.2% in Euro terms towards $21.50 per ounce.
Chart of the gold / silver ratio, last 3 decades' daily data (London benchmark prices). Source: BullionVault via LBMA
Measured in any currency, that put the Gold:Silver Ratio – which finds the 2 former monetary metals' relative value against each other simply by dividing the gold price by the silver price – just beneath 83.
Down more than 5% from March's previous daily average, that level of gold-to-silver ratio marks the lowest cost of gold in terms of silver since New Year.
Silver's giant bullion-backed exchange-traded fund – the iShares Silver Trust (NYSEArca: SLV) – yesterday expanded for a 2nd day running, cutting its liquidation for March to 3.7% and needing 14,327 tonnes of silver to back its shares in issue.
That holding – larger by 6.7% from mid-January's 2.5-year low but still 1/3rd smaller than the #silversqueeze peak of early 2021 – equates to around 56% of global annual silver-mine output.
Gold's giant GLD ETF has meantime expanded by 1.5% so far in March to need over 929 tonnes of bullion to back its shares in issue – the most since mid-October – but the No.2 gold ETF, the iShares IAU, has barely changed at 443 tonnes, its smallest since May 2020.
Together, that put the size of the world's 2 largest gold-backed ETF trust-fund products at less than 38% of last year's global gold-mine output and almost 1/4 smaller than the record weight of late-2020, with only their 4th monthly inflow of the last year.
While more than half of silver's end-use demand comes from industrial users in contrast to less than 1/10th for gold, Thursday's rise in silver prices defied a wider drop in industrial commodities, with crude oil edging back from 2-week highs and copper slipping further from last Thursday's 3-week peak.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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