Silver price hits highest level in seven years

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Silver prices are up around 15% this week. Some analysts see the move as the start of a bull run fueled by low interest rates, resurgent investment demand, disrupted production and a pickup in industrial consumption.

“This is a typical low-liquidity summer market where prices tend to be easier to push, especially when momentum has been established along the support trio,” Ole Hansen, chief executive, told Bloomberg. commodity strategy at Saxo Bank A/S.

“The closer gold gets to its all-time high, the stronger the magnetic field will become and that could see it challenge that level before long.”

Citi analysts said prices could hit $25 in 6-12 months

Falling bond yields have made holding gold and silver more attractive, and investors are stockpiling both in hopes they will hold their value as central bank stimulus measures unleashed during the pandemic erode other assets. Gold prices also maintained their upward momentum on Wednesday, surpassing the nine-year high set the previous trading day.

Silver consumption in industries, such as solar panels and electronics, is also expected to rise as the economy rebounds, while silver mining output is expected to fall 7% this year, according to forecasts. from consultancy firm Metals Focus, with the new coronavirus halting operations.

At the same time, the weakening dollar is making silver cheaper for buyers of other currencies, fueling the rally.

Credit: Reuters

Citi analysts said in a note that prices could hit $25 in 6 to 12 months – outperforming gold – as investors scramble to protect their wealth and global economic activity improves.

However, a Reuters poll of 42 analysts and traders conducted this month indicated that silver will average $20.03 an ounce next year.

Technical indicators show that silver is overbought, suggesting that prices will struggle to move higher immediately.

Any weakness is a chance to buy, some traders say.

“A deep decline is looming,” tweeted Gianclaudio Torlizzi of consultancy T-Commodity. “I will use the correction as an opportunity to charge long. A new bull market has started.


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