Silver prices rally, but ease back from session highs
Gold futures ended lower on Thursday to notch a sixth straight decline — their longest streak of session losses since March 2019.
Prices had moved up in early dealings in the wake of some downbeat data on the U.S. economy, then turned lower as Treasury yields climbed sharply. Rising bond yields can dull the luster of gold, which offer no yield.
“Gold is battling yield strength and a firmer dollar,” Peter Spina, president and chief executive officer at GoldSeek.com, told MarketWatch.
“Gold is a bit of an afterthought today with so much interest and focus on silver,” he said. Prices for silver rallied after a post by a Reddit user, who suggested executing a “short squeeze” in the silver market.
The gold-silver ratio fell under 70 during the session, “with silver breaking above resistance, so silver has more of a shine than gold,” said Spina.
Meanwhile, data released Thursday from the World Gold Council revealed that global gold demand fell last year to its lowest level since 2009.
February gold GC00, 1.57% GCG21, 1.57% lost $7, or 0.4%, to settle at $1,837.90 an ounce. The loss was gold’s sixth straight day of declines, the longest skid for prices since the seven-session loss ended March 5, 2019, FactSet data show.
April gold GCJ21, 1.50%, which is now the most-active futures contract, declined by $7.70, or 0.4%, to settle at $1,841.20 an ounce. The April contract has been trading in a range between $1,878 and $1,821 for about two weeks.
Gold prices had moved up shortly after some downbeat U.S. economic data early Thursday.
A reading of those seeking initial jobless claims in the week ended Jan. 23, fell by 67,000 to a seasonally adjusted 847,000, marking the lowest level in three weeks, but layoffs were still high early in 2021 as the economy wrestled with a winter surge in the coronavirus pandemic.
Separately, a report on U.S. economic growth, or GDP, showed that the economy grew at a modest 4% annual pace in the final three months of 2020, suggesting that the road to recovery may be longer than more optimistic expectations.
The move for gold also come after the Fed held monetary policy steady Wednesday, while noting that the sectors of the economy already damaged by the coronavirus pandemic are experiencing another round of pain. The central bank’s interest-rate committee also said the pace of the economic recovery and employment has “moderated” in recent months.
“It is very clear that there is still a lot of slack in the market,” Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch. “This means that the Fed is no position to change their narrative.”
“Moreover, looking at the weekly chart, it is becoming increasingly clear that gold prices are about to start a massive bull run,” he said.
Meanwhile, silver was the bigger mover on Comex Thursday, though prices settled off the day’s best level.
Silver for March delivery SI00, 6.22% SIH21, 6.22% added 53, or 2.1%, to settle at $25.922 an ounce, after trading as high as $27.10. The settlement was the highest since Jan. 7.
When asked about the move in silver, Spina said that silver “remains a very cheap, undervalued precious metal.”
He believes “the influx of investor interest will ignite another buying wave higher in the coming quarters, above the $28 then $30 resistance.”
“Such a tiny market with such a large short position could easily become a target for a short squeeze,” he said. But even without the Robinhood crowd, “silver is going a lot higher with gold — outperforming the price on the upside.”
Rounding out action on Comex, March copper HGH21, -0.13% added 0.6% to $3.578 a pound. April platinum PLJ21, 3.18% shed 0.6% to $1,072.40 an ounce, while March palladium PAH21, 0.76% ended at $2,322.30 an ounce, up 0.5%.