SILVER traded close to record levels on Monday following modest profit-taking ahead of this week’s Federal Reserve interest rate announcement, whilst gold edged marginally higher, said Bloomberg News.
The white metal recovered from earlier losses of up to 1.4% during Asian trading, hovering within a dollar of last session’s historic peak of $59.3336 per ounce.
Investor appetite remains robust, with silver-backed exchange-traded funds recording their strongest weekly inflows since July, attracting nearly 590 tons and signalling confidence in further gains.
However, technical indicators suggest caution. Silver’s 14-day relative strength index stood at 70.6 on Monday, traditionally viewed as overbought territory by traders.
“The current rally does appear frothy and retail investors are demonstrating some momentum-chasing behaviour,” observed Justin Lin, investment analyst at Global X Management Co in Sydney.
Silver has more than doubled in value this year, substantially outpacing gold’s 60% advance, with recent momentum driven by expectations the Fed will reduce rates by 25 basis points at its final 2024 meeting. Lower interest rates typically benefit non-yielding precious metals.
The market continues experiencing aftershocks from an historic short squeeze. London lease rates remain elevated near six percent despite significant metal inflows to the trading hub, whilst Shanghai inventories languish near decade lows, said the newswire.
“Strong industrial demand, sustained safe-haven flows, and the highest weekly ETF inflows since July further reinforced bullish momentum,” said Manav Modi, analyst at Motilal Oswal Financial Services.
Options activity on Comex silver futures has surged as investors position for increased volatility, with retail participation particularly pronounced.
Separately, China extended its gold reserve purchases for a 13th consecutive month, reaching approximately 74.12 million ounces.
Silver traded at $58.3640 at 3:40pm Singapore time, whilst gold rose 0.3% to $4,212.12.
