The Federal Reserve’s decision to trim interest rates put the US Dollar on a bearish path.
The Bank of Japan will announce its decision on monetary policy on Friday.
XAU/USD resumed its advance and aims to extend gains beyond $2,600.
Spot Gold recovered its bullish tone early on Thursday, and traded as high as $2,594.75 a troy ounce, holding on to gains and changing hands at around $2,590 mid-American session. Stock markets reflect the optimism that harms US Dollar’s demand, following the Federal Reserve (Fed) monetary policy announcement. The Fed trimmed interest rates by more than anticipated on Wednesday, kick-starting a new monetary policy cycle with a 50 basis points (bps) cut to the benchmark rate.
Fed officials’ message, however, was not as dovish as expected. As usual, Chairman Jerome Powell maintained a cautious tone, refraining from explaining future action, and repeating the decisions will depend on upcoming data. The US Dollar moved back and forth with the news, but resumed its slump with the Asian opening, as global indexes edged north, welcoming lowering borrowing costs in the world´s largest economy.
Encouraging United States (US) data provided temporal support to the USD ahead of Wall Street’s opening. The country published the Q2 Current Account, which posted a deficit of $266.8 billion. Initial Jobless Claims for the week ended September 13 improved to 219K while the Philadelphia Fed Manufacturing Survey printed at 1.7 in September, much better than the previous -7 or the expected -1.
The Bank of Japan (BoJ) will announce its monetary policy decision early on Friday, and market participants anticipate no changes to the monetary policy. Any announcement that diverges from expectations will likely bring volatility back and affect Gold price.
XAU/USD short-term technical outlook
XAU/USD is on its way to retest its recent highs and even extend its gains, despite the positive market mood, as investors drop the USD. Technical readings in the daily chart support such a scenario, as technical indicators head firmly north well above their midlines. At the same time, all moving averages aim north, with the 20 Simple Moving Average (SMA) providing dynamic support at around $2,527.
The near-term picture is also bullish. In the 4-hour chart, technical indicators have extended their advances within positive levels, although with limited upward strength as the XAU/USD pair develops below its recent peaks. Finally, the 100 and 200 SMAs gain upward traction far below the current level, while a flat 20 SMA attracts intraday buyers in the $2,570 region.
Silver (XAG/USD) faces downward pressure amid a strong US dollar, but rising demand in China could trigger a price recovery.
China’s Growing Demand for Silver (XAG/USD) Offers Hope
On a more optimistic note, China’s increasing demand for silver is emerging as a potential catalyst for price recovery. The Shanghai Metals Exchange has reported that silver prices in China are approximately 10% higher than in Western markets, highlighting strong domestic demand. This surge is attributed to China’s booming solar panel industry and tech sector, which have driven silver imports to exceed 400 tons in both June and July—double the previous year’s monthly average of 200 tons.
The robust demand from China has raised concerns about a potential “silver squeeze” as global production struggles to keep pace with rising demand. Analysts warn that this imbalance could lead to higher silver prices, especially in industries such as electronics and solar energy that are heavily reliant on the metal. If silver remains under-supplied, Western markets could face significant price increases.
Short-Term Technical Outlook for Silver (XAG/USD)
Silver (XAG/USD) is trading at $27.93, reflecting a 0.43% decline and ongoing bearish sentiment. The 4-hour chart reveals silver’s struggle to hold above the pivot point at $28.09. Immediate resistance is noted at $28.66, followed by further resistance at $28.98 and $29.42. On the downside, key support levels are identified at $27.54, $27.24, and $26.92.
Technical indicators are pointing to a bearish outlook for silver. The 50-day Exponential Moving Average (EMA) at $28.65 and the 200-day EMA at $28.90 act as strong resistance levels, reinforcing downward pressure. The current downward channel suggests that further declines could be expected unless silver prices break above $28.09. However, a break above this level might signal a potential bullish reversal.
Conclusion
In summary, while silver (XAG/USD) remains under bearish pressure due to a strong US dollar and mixed economic data, China’s rising demand offers a glimmer of hope for price recovery. The potential for a “silver squeeze” could further drive prices higher, particularly in industries dependent on the metal. As traders await key economic data, the focus will remain on whether silver can break above critical resistance levels, signaling a possible shift in market sentiment.
4 min read Last Updated : Sep 19 2024 | 10:29 AM IST
TPCCrude oil: Middle East in focus
Performance
WTI crude oil had surged on Tuesday on the incident of pager blasts in Lebanon which killed eight people and injured hundreds; however, yesterday, it settled 0.83 per cent lower at $69.38 despite a 50-bps cut by the Fed.
FOMC monetary policy decision
The US Federal Reserve, as the markets largely expected, slashed the Fed Fund rate by 50 bps to 4.75 per cent-5 per cent range. Commodities rallied soon after the rate cut decision only to reverse their gains to fall sharply lower as the Fed Chair Powell’s presser was balanced. Powell said that the 50-bps point rate cut was to ensure that the central bank is not behind the curve as the Fed is committed to its dual goals of inflation control and maximum employment. He added that the US economy was in a good shape and inflation was headed lower to the Fed’s target of 2 per cent.
The US Dollar Index recovered as Powell ruled out a recession possibility in near term. He cited a strong labour market amid cooling inflation. In addition, he added that a 50-bps point is not going to be the usual norm as going forward the Fed will go data by data to decide its monetary policy.
The US yields surged on his comments, which weighed on commodities complex severely. The US bonds have continued to decline today also.
Traders’ focus will be on the Bank of England’s monetary policy decision due today. Although the Bank is not expected to lower rates today, its monetary policy stance will be closely scrutinised.
Data roundup
UK inflation data were in line with the forecast. Consumer prices rose 2.2 per cent from a year earlier, the same pace as the previous month.
US housing starts (August) came in at 1356K verssus the forecast of 1318K. Building permits (August) came in at 1475K Vs the forecast of 1410K as the prior data was revised higher from 1396K to 1406K.
Upcoming data and event
Today’s US data on tap include Total Net TIC flows (July), current account balance (2Q), Philadelphia Fed Business Outlook (September), weekly job data and existing home sales (August).
The Bank of England will deliver its monetary policy decision today. It is expected that the Central Bank, having slashed benchmark rates to 5 per cent in its previous meeting, will go for a pause in this meeting; however, with two monetary policy meetings still left this year, it is expected that the Bank will cut rates twice more.
US weekly DoE crude oil data
DoE weekly data were somewhat positive for the counter. US inventories dipped by 1630K barrels (forecast 213K b), Cushing stocks were down by 1979K barrels, gasoline inventories rose by 69K (forecast 1140K barrels), while distillate inventories were up by 125K barrels (forecast 994K barrels).
Refinery utilisation in the week ending September 13 edged lower by 0.70 per cent (Forecast -1.26 per cent). US crude oil stocks fell to the lowest levels in almost a year to 417.50 mb. Crude oil implied demand was 19755 Kbpd as compared to 20048 Kbpd in the previous week. gasoline demand sunk further below 9 mbpd, the second straight week of falling below this mark.
US gasoline inventories rose to the highest level since early August as inventories reached 221.60 mb. US Crude oil production fell to 13.20 mbpd, the lowest since June.
Outlook
WTI crude oil is expected to find good support into the dips as apart from the Fed cutting rates by 50-bps, geopolitical tensions are back in focus after a second of devices’ explosions rippled through Lebanon and the region killing 8 people and injuring over 300. With Israel looking to carry out its offensive against Hezbollah to the next level, traders will monitor the evolving situation in the Middle East closely for possibility of disruptions to the oil supplies.
Near-next month spread remains in a deep backwardation of over $1.
WTI Crude oil may rise to $72 in the near term. Support is at $67. Buying the dips is advisable.
(Disclaimer: Praveen Singh is a senior fundamental research analyst of currencies and commodities at Sharekhan. Views expressed are his own.)
Silver price trades sideways below $31.00 with Fed policy on the horizon.
The Fed is widely anticipated to pivot to policy normalization.
The likelihood for the Fed to reduce interest rates by 50 bps is higher.
Silver price (XAG/USD) oscillates below the crucial resistance of $31.00 in Wednesday’s European session. The white metal stays on the sidelines as investors await the Federal Reserve’s (Fed) monetary policy, which will be announced at 18:00 GMT.
The Fed is poised to deliver its first interest rate cut decision in more than four years as officials are worried about deteriorating labor market conditions. However, policymakers remain confident that price pressures are on track to return to the bank’s target of 2%.
With firm speculation that the Fed will pivot to policy normalization, investors will focus on the likely interest rate cut size. According to the CME FedWatch tool, 30-day Federal Funds Futures pricing data shows that the probability of the central bank cutting rates by 50 basis points (bps) to 4.75%-5.00% is 65% and the rest favors a 25-bps rate cut. Apart from the Fed’s policy decision, investors will also focus on the Fed’s dot plot and economic projections.
Ahead of the Fed policy, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, drops to near 100.80. On the contrary, 10-year US Treasury yields jump to near 3.67%. The announcement of the Fed’s large rate cut would weigh heavily on the US Dollar and bond yields.
Silver technical analysis
Silver price trades cautiously ahead of the Fed’s interest rate decision. The white metal could a fresh upside if it manages to break above September 16 high of $31.10. The near-term outlook of the Silver price remains firm as the asset holds above the 20-day Exponential Moving Average (EMA), which trades around $29.40.
The 14-day Relative Strength Index (RSI) rises above 60.00. A fresh round of bullish momentum could occur if the oscillator sustains about this level.
Silver daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
METALS-Copper edges higher ahead of expected US rate cut
Updates prices at 1610 GMT
By Eric Onstad
LONDON, Sept 18 (Reuters) –Copper prices ticked higher on Wednesday ahead of a widely expected rate cut by the U.S. Federal Reserve, which investors bet will support metals demand.
Three-month copper on the London Metal Exchange CMCU3 was up 0.5% at $9,417 per metric ton by 1610 GMT after slipping on Tuesday.
U.S. Comex copper futures HGc2 added 0.3% to $4.24 a lb.
LME copper has rebounded by 6% since touching a three-week low on Sept. 4, but is still down 15% since hitting a record high in May.
“The market is looking for additional support to come from that rate cut announcement and is also focusing on China, for that government to do more to arrest the slide we’re seeing,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Chinese President Xi Jinping last week urged authorities to strive to achieve annual economic goals, leading to expectations of stimulus measures to bolster a flagging economic recovery.
LME copper was hovering just under $9,500, a level that, if broken, would open up the path to challenge $10,000, Hansen added.
“A lack of profit-taking does indicate that there is some underlying belief that what happens next will add some support to the market,” he said.
Most of the buying activity was by computer-driven funds, a trader said.
The chances of the Fed kicking off its easing cycle with a super-sized cut of 50 basis points were revived earlier this week after media reports raised the prospect of more aggressive action.
A rate cut often helps boost economic growth and demand for metals, along with pressuring the U.S. dollar.
A softer dollar index =USD supported the market, making dollar-priced metals cheaper for buyers using other currencies.
LME zinc CMZN3 was the worst performer, falling 1.2% to $2,891 a ton after more inflows of inventories to LME-registered warehouses, which have jumped 10% over two days to 251,850 tons. MZNSTX-TOTAL
LME aluminium CMAL3 edged up 0.4% to $2,533 a ton, nickel CMNI3 rose 0.3% to $16,240, lead CMPB3 gained 0.9% to $2,036 while tin
For the top stories in metals, click TOP/MTL
($1 = 7.0955 yuan)
Reporting by Eric Onstad; Additional reporting by Mai Nguyen in Hanoi; Editing by Mark Potter, Barbara Lewis and David Evans
For related news and prices, click on the codes in brackets: LME price overview RING= COMEX copper futures 0#HG: All metals news MTL All commodities news C Foreign exchange rates FX=SPEED GUIDES LME/INDEX
Gold price bounces early Thursday after a volatile post-Fed trading on Wednesday.
The US Dollar extends recovery with Treasury bond yields, as a jumbo Fed rate cut was priced in.
The daily bullish RSI continues to keep buyers alive, as Gold price looks to retest $2,600.
Gold price is defending $2,550 early Thursday, catching a breath after intense volatility witnessed in the aftermath of the all-important US Federal Reserve (Fed) monetary policy announcements and Fed Chairman Jerome Powell’s press conference.
Gold price fails to capitalize on jumbo Fed rate cut
Traders turn their focus to the upcoming US Jobless Claims and Existing Home Sales data to gauge the health of the overall economy, which could shed fresh light on the future path of rates by the Fed, having a significant impact on the value of the US Dollar and Gold price.
The Fed announced a 50 basis points (bps) rate cut on Wednesday, bringing the fed funds rate to the range of 4.75%-5.0%. The Summary of Economic Projections, the so-called Dot Plot chart, suggested a total of 100 bps of rate cuts for this year and the next.
Fed Chair Jerome Powell, during his press conference, also maintained a dovish tone, explaining that “this recalibration of our policy stance will help maintain the strength of the economy and the labor market, and will continue to enable further progress on inflation as we begin the process of moving toward a more neutral stance. We are not on any preset course. We will continue to make our decisions meeting by meeting.”
In an immediate reaction to the Fed policy announcements, the US Dollar (USD) tumbled to the lowest level in over a year against its major rivals amid a sharp sell-off in the US Treasury bond yields, lifting the non-interest-bearing Gold price to a fresh record high of $2,600. However, Gold price faced rejection at that level and corrected sharply to settle in the red near $2,560.
The pullback in the Gold price was fuelled by an impressive turnaround staged by the US Dollar, as an outsized rate reduction was well priced in by the markets. Further, hopes that a large Fed rate cut could lead to a potential ‘soft-landing’ for the US economy also aided the Greenback’s recovery across the board.
The USD recovery stretched into the Asian session on Thursday, keeping Gold price struggling, as traders look to a fresh batch of US economic data for fresh trading impetus. Gold price, however, continues to find support at lower levels, courtesy of the renewed Middle East geopolitical tensions.
According to the latest reports, at least 20 people were killed and over 450 injured in Lebanon after hand-held radios or walkie-talkies used by the militant group Hezbollah exploded in multiple parts of the country. These explosions occurred a day after a suspected Israeli attack targeting pagers used by the group for communication between its members.
A re-escalation of the tensions between Israel and Hezbollah is likely to bode well for the traditional safe-haven Gold price, also as hopes of further rate cuts. Markets are now pricing in a 25 bps rate cut at the Fed’s November and December meeting.
Gold price technical analysis: Daily chart
As observed on the daily chart, Gold price remains bullish, as the 14-day Relative Strength Index (RSI) turns north while well above the 50 level, currently near 63.00.
The renewed upside in Gold price could challenge the previous record high at $2,590 again before taking on the $2,600 threshold.
Acceptance above that level will call for a test of the $2,650 psychological barrier.
On the flip side, if the corrective decline resumes, Gold price could threaten the previous day’s low of $2,547, below which the August 20 high of $2,532 will be tested.
Further down, the 21-day Simple Moving Average (SMA) at $2,524 could be a tough nut to crack for Gold sellers.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Wall Street financial services company UBS has cut its oil price forecasts for the period 2024-2026, citing weaker global demand and a more stable supply outlook. The analysts have lowered the forecast for average Brent crude oil in 2024 by $4 to $80 per barrel, with the forecast for Q4 2024 lowered to $75 per barrel from $83.
UBS now sees Brent averaging $75 per barrel in both 2025 and 2026, a $5 per barrel reduction. The analysts have suggested that OPEC+ will be forced to postpone the unwinding of its voluntary production cuts, with any meaningful increases now seen coming in 2027 or 2028, compared to earlier expectations of a return by mid-2025.
The latest oil price rally continued on Monday’s session despite crude production in the Gulf of Mexico resuming following disruptions caused by Hurricane Francine. Brent crude for November delivery was up 1.3% at 11.50 am ET to trade at $72.56/barrel while WTI crude for October delivery was up 1.0% to change hands at $69.66/barrel.
Last week, commodity experts at Standard Chartered reported that oil markets are overlooking the imminent removal of even more barrels from the markets in the coming months. Back in July, Russia, Iraq and Kazakhstan submitted theircompensation plans to the OPEC Secretariat for overproduced crude volumes for the first six months of 2024. According to OPEC, the entire over-produced volumes will be fully compensated for over the next 15 months through September 2025, with Russia ‘paying back’ a cumulative 480 kb/d, Iraq 1,184 kb/d and Kazakhstan 620 kb/d. According to StanChart, the compensatory output cuts by the three OPEC members work out to a combined 370 kb/d reduction in October, and then an amount varying between 162 kb/d and 206 kb/d for November 2024 through to September 2025. StanChart has worked out that adding the compensation schedule to the recently announced reduction in targets due to delaying the implementation of tapering will result in OPEC production clocking in at 530 kb/d lower in Q4-2024; 540 kb/d lower in Q1 and Q2-2025 and 560 kb/d lower in Q3-2025, if all commitments are kept. By Alex Kimani for Oilprice.com
The Federal Reserve is about to announce its decision on monetary policy.
A 25 basis points rate cut has been already priced in, but officials could still surprise markets.
XAU/USD turned lower in the near term, the Fed will set the tone.
Gold hovers around $2,570 a troy ounce on Wednesday, unchanged on a daily basis as the Federal Reserve’s (Fed) monetary policy announcement looms. The United States (US) central bank is expected to trim interest rates for the first time in four years after pushing toward record highs amid soaring inflation in the pandemic aftermath. Policymakers are also weighing the effects of monetary restrictions on economic progress, but the market won’t hear that from them.
The Fed will also release the Summary of Economic Projections (SEP) with fresh forecasts for growth, inflation and unemployment and officials´ views on the future path for monetary policy. The latter could have a large impact on the US Dollar, as, ahead of the announcement, financial markets have already priced in a 25 basis points (bps) rate cut.
Generally speaking, the more dovish the event, the more will the US Dollar lose against its major rivals, while an unexpected hawkish outcome will likely have a larger impact amid the surprise factor, benefiting the American currency.
XAU/USD short-term technical outlook
From a technical point of view, the daily chart for XAU/USD shows the risk skews to the upside. The pair holds near an all-time high of $2589.50 posted this week, while all moving averages aim higher, far below the current level. The closest one is the 20 Simple Moving Average (SMA), providing support in the $2,520 price zone. At the same time, technical indicators hold well above their midlines with uneven and limited directional strength.
In the near term, however, the risk leans to the downside. A directionless 20 SMA provides intraday resistance, rejecting advances. The 100 and 200 SMA have partially lost their upward strength, far below the current level. Finally, technical indicators aim lower, with the Momentum indicator accelerating lower below its 100 line.
Silver attracts some sellers and drops to a fresh weekly low on Wednesday.
Any further slide could be seen as a buying opportunity and remain limited.
The $29.40 confluence resistance breakpoint might now act as a strong base.
Silver (XAG/USD) drifts lower during the Asian session on Wednesday and moves away from a one-month peak, around the $31.10 region touched earlier this week. The white metal currently trades around mid-$30.00s, or the weekly low and down nearly 0.70% for the day, though the technical setup supports prospects for the emergence of some dip-buying.
The recent breakout through a short-term descending trend-line resistance, around the $29.40 area, which coincided with the 100-day Simple Moving Average (SMA) validates the near-term positive outlook. Moreover, oscillators on the daily chart are holding in positive territory and are still far from being in the overbought zone, suggesting that the path of least resistance for the XAG/USD is to the upside.
From current levels, any subsequent decline is likely to attract fresh buyers near the $30.00 psychological mark. This should help limit the downside near the $29.40 confluence resistance breakpoint, now turned support. The latter should act as a pivotal point, which if broken could drag the XAG/USD below the $29.00 round figure, towards the $28.45-$28.40 intermediate support en route to the $28.00 mark.
On the flip side, the $30.80 region now seems to act as an immediate hurdle ahead of the $31.00 mark, above which the white metal could prolong its appreciating move. The XAG/USD might then climb to the $31.45 region and retest the July swing high, around the $31.75 zone, before aiming to reclaim the $32.00 round-figure mark and challenge a one-decade high, around mid-$32.00s touched in May.
Silver daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold’s. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold’s moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
