Gold News

Silver Rebounds from $2 Weekly Plunge, Gold Price Near Record Friday Finish

SILVER and GOLD prices both rallied from sharp falls in London trade Friday, recovering from 6-week and 1-week lows respectively in Dollar terms as the US currency trimmed its strongest gain in 3 months and Western stock markets also bounced with bond prices.
Gold dropped near $2000 per ounce before regaining $17 to set its 3rd highest-ever Friday finish in London in Dollar terms while edging a new record weekend level in Euros above €1855.
The silver price had earlier fixed at midday around $23.85 per ounce – down $1 from noon Thursday and $2 below last Friday's London benchmarking to show its steepest weekly plunge since October.
Silver then reduced that 7.7% week-on-week price drop, rising back to $24 in spot bullion trade.
The Dollar Index meantime held on track for its sharpest week-on-week rise since mid-February, when minutes from that month's Fed rate-rise meeting backed what chairman Jerome Powell had said after that decision, that "ongoing [interest-rate] increases will be appropriate [and] I don't see us cutting rates this year."  
While all-but 0.2% of betting on year-end Fed futures still sees the US central bank cutting rates by Christmas, the consensus forecast according to the CME derivatives exchange's FedWatch tool has now risen to 4.49%, up nearly 10 basis points from last weekend and sharply above the 1-month low of 4.19% set on Thursday last week.
That day saw gold prices spike to a new spot-market record of $2078 and silver touched a 13-month high at $26.14 per ounce after the Fed raised rates to a ceiling of 5.25% but said monetary policy will now be "data dependent".
Chart of silver priced in Dollars (London benchmark) vs. CME FedWatch's consensus forecast for end-2023 US interest rates. Source: BullionVault
"Precious metals and especially silver [have] near-perfect conditions for the ongoing bull market," said analysis from US financial giant Citi as silver hit $26 per ounce in mid-April, projecting another 18% jump to $30 per ounce "in the coming months."
With silver's year-to-date average rising 6.3% so far from 2022's annual price amid the US regional bank and Credit Suisse crisis, "There's a lot more room to run," said Mike DiRienzo, executive director of industry association The Silver Institute earlier this week, but for global demand, "It's going to be hard [for 2023] to get to last year's record level."
"As of now, we’re getting a much-needed pullback, but everything is pointing up medium term/long term in gold and silver," said US coin and bar retailers Sprott Money amid Thursday's plunge.
Euro gold prices today rose towards a record-high Friday finish above €1855 per ounce as new data said annual inflation in France and Spain last month came in as analysts forecast at 6.9% and 4.1% respectively.
The UK gold price in Pounds per ounce also rose, recovering a dip below £1600 to head for its 4th highest-ever weekly finish at £1612 after the Office for National Statistics said the UK economy shrank 0.3% in March but grew 0.1% across the first quarter of 2023 as a whole.
With the European Central Bank's Christine Lagarde repeating yesterday that inflation across the 19-nation Eurozone remains "too high for too long", the Bank of England forecast on Thursday that UK inflation – currently running in double digits – won't fall to its 2.0% target until 2025.
Following yesterday's UK rate hike, both the BoE and the ECB have now raised the cost of borrowing to the highest since 2008 at 4.50% and 3.75%.
With US rates now rising from 0% at the start of 2022 to the highest since 2007 at 5.25%, "The banks that have failed have had some very unique characteristics that have made them vulnerable," said US Treasury Secretary (and former Fed chief) Janet Yellen in an interview with Bloomberg today, also warning Republican politicians that the "only good outcome" in their stand-off with Democrat President Joe Biden over the federal US borrowing limit would be to agree to raise it from the current $34 trillion so as to avoid the government of the world's largest economy defaulting on its debt.


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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