Silver rallies to $24 on a banking turmoil and the supportive gold-silver ratio

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Vrasidas Neofytou
Head of Investment Research

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Silver rallies to $24 on a banking turmoil and the supportive gold-silver ratio

Silver extended recent gains on Thursday toward $24/oz, a level last seen at the end of January, as a softer U.S. dollar and lower bond yields drove demand for the precious metal, ahead of the U.S. inflation data due later Friday to gauge the Federal Reserve’s next policy move.

Silver price, Weekly chart

Together with Gold, which climbed briefly above the $2,000 key psychological level last week, the white metal has been posting a significant upward momentum rally since early March, seeing its price bouncing from monthly lows of $19.80/oz to as high as $24/oz this morning.

The banking turmoil, the falling dollar, and bond yields following the expectations for a less hawkish Federal Reserve have lifted safe-haven bullion, resulting in silver gaining around 20% from the March bottom in bullish momentum.

From a technical perspective, the trend for silver remains strong to the upside. A clear surpass of the $24.50 key resistance level (January highs) could open space for a new recovery to the next resistance zones at $27 and then toward the $30 key psychological level.

Gold-silver ratio:

Another sign of the recent strength in the price of silver is the gold-silver ratio, which is analyzing the ratio between the two precious metals, and expresses the number of ounces of silver needed for purchasing one ounce of gold.

With the price of Gold currently at $1,980/oz and Silver at $24/oz, the ratio lies at 82.50 (1.980/24), which is much lower than the 91 traded in early March before the collapse of the two U.S. banks.

With the ratio being nearly 80 mark, it is clearly indicating the solid rebound of silver seen in the last two weeks of the banking crisis and its overperformance versus gold amid the combined haven and industrial demand.

Industrial demand:

Silver in comparison to gold witch it enjoys a close safe-haven correlation from ancient times, it has also a strong demand for industrial usage since silver has been a key component in the energy transition and the technology revolution.

The white metal is expected to have a growing demand from different industrial sectors – especially the photovoltaic and electric car batteries – which are expected to further boost its demand in the next few years on a global scale as part of the green transition and innovation.

Commodities investors are fleeing into silver due to its crucial role in the energy transition where its conductive qualities see it used in photovoltaics for solar energy and in the batteries of electric vehicles.

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