Gold Retreats, While Silver Rises to Near Record in Wild Ride
Gold retreated further below $4,000 an ounce on signs of a breakneck rally that took it to a record high that may have been overdone, while silver rose to near the highest since 1980.
Bullion traded near $3,963 an ounce on Friday, after losing 1.6% in the previous session. Technical gauges show the precious metal has been in overbought territory for much of the past month, prompting some investors to lock in gains after a rapid four-day winning streak that pushed prices to a record high of $4,059.31 an ounce on Wednesday.
“The strong momentum that had delivered new highs day after day gave way, with some traders keen to reduce exposure from extended positions and lock in performance,” Chris Weston, head of research at Pepperstone Group Ltd., said in a note.
Silver reached $51,235 an ounce on Thursday — the highest in more than four decades — before paring gains. The metal is still up about 70% this year, easily outpacing gold's advance. The rally is part of a broadening interest in precious metals, fueled by fears of an overheating equities market, fiscal pressures in the US and threats to the Federal Reserve's independence.
Gold's selloff on Thursday coincided with a slide in US equities. While bullion is often viewed as a haven during market turmoil, it can drop alongside risk assets when investors liquidate positions to cover losses elsewhere. Nevertheless, bullion is still on track for an eighth weekly advance.
Precious metals have gained momentum as part of the so-called “debasement trade”, in which investors flock to the perceived safety of Bitcoin, gold and silver while pulling away from major currencies like the dollar. Concerns the value of financial securities will be eroded by inflation and unsustainable fiscal deficits are increasing their appeal.
Silver often moves in tandem with gold, sharing its strong negative correlation with the US dollar and Fed interest rates. But the metal also has industrial applications in solar panels and wind turbines, which collectively account for more than half of all silver sold. Demand is set to exceed supply for the fifth consecutive year in 2025.
Source: Bloomberg
