Silver price rebounds from one-week low as US equities hit record highs
The price of silver has rallied so far in today’s trading, pulling away from a one-week intraday low hit earlier today and paring losses incurred during the previous session. The precious metal fell under heavy pressure from the US as equities advanced to record levels while the dollar hit an 11-year high.
Today, silver for immediate delivery had risen about 0.68, or 11 cents, to $16.47 per ounce as of 07:02 GMT, and was trading about 1.9 percent below its 50-day simple moving average of $16.79. The precious metal has rebounded from the $16.06 hit earlier today, which was the lowest level it has traded since 23 February.
During the previous session, silver gave back its earlier gains to end the session about one percent down at $16.36, extending February’s 3.4 percent drop. Any sustainable gains, however, are likely to remain restrained due to the strengthening in the US dollar, which saps demand for silver as it makes dollar-denominated precious metals more expensive when converted into other currencies. The DXY dollar index, which pegs the greenback against six of its major peers, hit an 11-year peak of 95.527 overnight.
Silver fell under additional pressure as US stock markets hit record levels, with the NASDAQ composite index closing above 5,000 for the first time in 15 years yesterday, while the Dow Jones Industrial Average and S&P 500 Index reached all-time highs. Bloomberg quoted Helen Lau, a Hong Kong-based analyst at Argonaut Securities Asia Ltd., as saying:
“The stronger dollar and higher US equities mean the market’s risk appetite is very strong”. According to Lau, if investors have a strong appetite for risk, they feel less inclined to purchase precious metals such as gold and silver, which are seen as “an asset to preserve value”.
The price of silver for May delivery had advanced over 10 cents to $16.51 an ounce as of 06:48 GMT. Scotiabank wrote in a report from yesterday that momentum indicators for silcer are neutral, while recent movement appears to have consolidated around the 100-day moving average of $16.63.
Based on the two most actively traded COMEX contracts, with a total volume of trade in gold and silver of 53,634 contracts as of 06:48 GMT today, the gold:silver ratio was at 73.24. The ratio risen about 0.3 percent since last month’s close.