Gold News

Gold and Silver Drop from 11% and 25% Monthly Jumps But Ratio Falls to New Year Level

GOLD and SILVER PRICES fell hard this afternoon in London, dropping from what would have been a new all-time record Friday finish and the highest weekend level in 21 months respectively as longer-term interest rates jumped despite new data saying that US retail sales shrank badly last month.
Betting fell back that the Federal Reserve might not raise its key target rate again next month as 10-year borrowing costs in the Treasury bond market jumped to the highest in 2 weeks as giant US financial services group J.P.Morgan reported record quarterly revenues, with profits for Jan-March jumping by more than a half from the same period last year.
Gold priced in the Dollar fell over $20 to touch $2018 before rallying $5 per ounce, while silver prices dropped 1.5% inside 20 minutes before rallying back to $25.80 per ounce.
Silver prices had earlier traded above $26 per ounce at London's midday benchmarking auction for the first time since mid-July 2021.
Thursday saw Comex gold futures set their 2nd highest ever settlement price, and London's PM benchmark auction also saw gold fix at its 2nd highest Dollar price in history, finding a balance between the quantity offered and wanted of large wholesale bullion bars at $2048.45 per ounce, less than $20 off the all-time gold peak set on 6 August 2020.
In contrast to gold, silver remains at barely half its all-time peak of January 1980, trading 46.8% below its spring 2011 high of $48.70 per ounce.
Even so, Friday morning's prices put the Gold/Silver Ratio – a simple measure of the 2 formerly monetary metals relative values – beneath 79 ounces of silver to 1 ounce of gold.
That's the lowest ratio of gold to silver since the New Year, thanks to the price of silver surging faster than gold since the US and then Swiss banking failures of mid-March.
Chart of the Gold:Silver Ratio since 1968. Source: BullionVault
At the peak of silver's ascent, London silver bullion prices had risen 25.2% by Wednesday from a month earlier, the fastest such rise since summer 2020 and a move matched or beaten on only 234 trading days across the last 55 years, putting it within the top 1.7% of silver's strongest 1-month jumps since April 1968.
Analysis by BullionVault says that, on average across the last 55 years, a 1-month gain in silver of 25% or more has typically been followed by a fall of 2.1% over the following 1-month period.
Gold's recent surge meantime saw it rise by 11.2% in Dollar terms in the month ending last Thursday, putting it within the top 4.5% of all 1-month moves since April 1968.
One-month moves in gold of 11% or more have typically been following by a further gain of 1.4% across the following 1-month period.
Coming after softer-than-expected US inflation data had boosted bets on the Federal Reserve cutting interest rates sooner than later in 2023, Friday's retail sales figures said consumer spent 1.2% less in March than February, the 2nd monthly decline.
But within that figure, sales by non-store retailers were up 12.3% year-on-year by value, while food services and drinking places saw sales rise 13.0% from March 2022.
Data from the Atlanta Fed meantime contradicted the sharp slowdown in average US wage growth reported by the standard Bureau of Labor Statistics figures, showing that median wages rebounded to 6.4% annual growth in March.
With some Fed members saying at last month's meeting that only the banking scare prevented them from wanting a half-point hike, betting that the US central bank will now raise its key interest rate by another quarter-point in May has jumped to price the odds at 4-in-5.

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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