Gold News

Silver Price Extends "Strong Bounce", "Breaks Resistance" to Push Gold/Silver Ratio to 2-Week Low

SILVER PRICES halted a $1 rise for the week so far Thursday lunchtime in London, dropping briefly back through $20 per ounce before outpacing the rising gold price again.
 
The gold/silver ratio – which measures the relative strength of the two metals – had earlier touched a 2-week low beneath 62.5 as silver prices rose faster than gold.
 
Trading some 60% below its peak of spring 2011, and after "evolving in a flat range for 2 months" according to technical analysis from Societe Generale, the silver price "could be in the process of forming a double-bottom pattern."
 
Despite "strongly bouncing" Wednesday however, the silver price "is facing stiff resistance" says the French investment and London bullion bank from a downtrend on the charts now running since August 2013.
 
Wednesday's "sharp recovery" in the silver price "failed to see [New York] close above that trendline resistance" agrees Swiss investment bank UBS, also connecting the high points hit in August and then October 2013 to "intersect today at 19.91."
 
Far Eastern dealers were today "taking advantage of the pop to sell into the rally," says the London bullion desk of South Africa's Standard Bank. But "technically the 14-month trendline resistance [starting Nov.2012] is broken [and] now acting as support."
 
"One can't complain that the markets are not moving," says London brokerage Marex Spectron's David Govett in a note, "albeit not in a straight line!"
 
Wednesday's spike and drop in gold was "disappointing," adds Govett, "but symptomatic of the moves so far this year."
 
"Even when stock markets have rallied," counters Edward Meir at INTL FCStone, "gold has not really dropped that much.
 
"[So] investors may well believe there is more turbulence ahead."
 
The US brokerage's analyst also suspects that steep falls in several emerging-market currencies " must be prompting some of the local population to move their savings...into hard assets like gold."
 
Emerging-market turmoil will not be allowed to derail the Bank of Japan's fight against two decades of deflation, deputy governor Hiroshi Nakaso said Thursday, promising to expand Tokyo's two-year doubling of its monetary base still faster if needed.
 
The hard-asset divisions of Western investment banks meantime continue to be cut or sold amid growing regulatory pressure and scrutiny, with J.P.Morgan now discussing a sale to privately-owned Swiss trading house Mercuria according to "two sources" apparently speaking to both Reuters and Bloomberg.
 
Australia's Macquarie Bank was reportedly keen to buy, but overlooked.
 
Bank of China International this week hired ex-Goldman Sachs metals chief Stephen Branton-Speak to advise its commodities team.
 
China's ICBC, the world's largest bank, is taking a controlling stake in Standard Bank's London-based commodities division.
 
No one has yet reported a buyer for Deutsche Bank's seat on the twice-daily London Gold Fix.
 
Japan's Mitsubishi UFJ Securities wants to close its international commodities division, says Reuters, a "strategic decision" led in part by increasing regulation.

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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