Silver’s in the spotlight as prices rally nearly 6% Friday, but it’s still gold’s show

(Kitco news) – It has finally happened; silver is making a move and dragging precious metals higher heading into the weekend.

According to analysts, the white metal is clearly in the driver’s seat as it lagged during gold’s breakout rally in the first quarter of the year. Not only has silver rallied above $31 an ounce, but the price is trading at its highest level since February 2013. July silver last traded at $31.635 an ounce, up 4.65% on the day.

Along with its 11-year high, silver is up more than 10% for the week, its best performance since early April.

Meanwhile, gold has seen a solid push above initial resistance, with some analysts predicting that it will move back to record highs sooner than expected. June gold futures last traded at $2,414.60 an ounce, up 1.34% on the day. The yellow metal is seeing nearly a 2% gain for the week.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted the entire precious metals complex is seeing broad-based gains. Platinum has pushed to a one-year high; July platinum futures last traded at $1,094 an ounce, up more than 2% on the day.

Traders and analysts wrapped up Platinum Week as the precious metal saw a 9% gain from last Friday. Platinum’s $90 move this week is its best gain since February 2021.

Hansen added that the rally in all three metals and a significant drop in the gold-silver ratio indicate robust bullish sentiment in the marketplace, an indication that this breakout could lead to sustainably higher prices.

“The gold-silver ratio is not a million miles from its long-term average, so silver strength could mean general precious metal strength,” Hansen said.

Fawad Razaqzada, Market Analyst with the StoneX Group and creator of Tradingcandles.com, said that he expects this is just the start of a new rally as the dam in the silver market has finally burst with no major catalyst.

“This breakout move has been building for days,” he said.

Razaqzada pointed out that there is a lot of pent-up sentiment in the silver markets, as prices have been range-bound for 3.5 years. He noted that it’s not surprising that silver is finally outperforming, as it benefits both as a monetary metal and an industrial metal.

Silver’s breakout move comes as copper looks to end the week at record highs above $5.00 per pound.

“Judging by copper’s bullish breakout that took place a few months ago and is still going, I reckon [silver’s] breakout can be sustained,” he said.

Although silver is stealing the spotlight right now, some analysts warn that this rally is still gold’s show.

Gold has consolidated in elevated territory, near record highs, as geopolitical uncertainty, central bank demand, and robust retail demand in Asia support prices.

Mike McGlone, senior market strategist at Bloomberg Intelligence, said he still likes gold as a safe-haven asset, especially as the U.S. market looks overstretched and due for a correction.

McGlone added that the risk for silver is if investors start to take profits in copper. He explained that lower copper prices would weigh on the white metal.

“Copper managed money positions (hedge funds) are stretched a bit too much net-long to sustain much above $5 a pound and probably needs the S&P 500 to keep rising for buoyancy,” he said. “Silver is riding the coattails of copper and gold, in my view and the bottom line is China is buying gold but may be hoarding all metals.”

Julia Khandoshko, CEO at the European broker Mind Money, said she also sees more potential for gold in the current environment.

“The Federal Reserve’s shift in rhetoric, particularly if it leads to a rate cut or a clear reduction plan, is expected to push gold prices upward. The escalation of the conflict in the Middle East will also support gold. As geopolitical risks grow, investors will buy even more gold, boosting the price,” she said.

Khandoshko added that she expects gold prices to resume their long-term uptrend as central banks continue to buy gold to diversify their foreign reserves.

“My estimates suggest that the accumulation pace is actually higher than what the IMF reports state,” she said.

Khandoshko said that silver will be sensitive to any data that highlights weak economic activity.

“Silver is just a commodity like copper, while gold is a hedging tool. Today, all metals, including silver, are growing for a simple reason—cautious sentiment on global economic growth. If we look at commodities charts, we can see they have a cyclical price trend: when there is an economic downturn, they are cheap; when the economy is recovering, they rise in price,” she said.

Philip Streible, Chief Market Strategist at Blue Line Futures, said that while he is bullish on gold and silver on this breakout move, a relatively quiet week could create some short-term profit-taking.

Some economists have said that the biggest risk for markets next week will be the plethora of Fed speakers. Six U.S. central bankers will speak at events on Monday and Tuesday.

The highlight of the week will be the minutes from the Federal Reserve’s monetary policy meeting that wrapped up May 1. 

The economic reports on the docket next week are mostly second-tier, with some attention to home sales numbers and a preliminary sentiment survey in the manufacturing and service sectors.

The week ends with the release of May’s durable goods data.

Economic data to watch next week:

Wednesday: U.S. existing home sales, FOMC minutes from April/May monetary policy meeting
Thursday: S&P Flash Manufacturing and Service Sector PMIs, weekly jobless claims, U.S. new home sales
Friday: Durable goods orders