16 February 2021

Silver Shines Brighter Than Gold, Crosses $28

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News shaping
the markets today

     

What’s happening: Silver futures surged past the $28 per ounce barrier, after remaining volatile for weeks on Reddit chatter.

What happened: Silver prices rose sharply on Monday, after returning most of the Reddit-driven gains late last week.

Although gold climbed yesterday, the yellow metal has been under significant pressure due to a number of reasons.

Why it matters: Silver has outperformed gold so far in 2021. While the white metal has gained around 5.7% year to date, the yellow metal is down almost 4% so far this year.

The ascending trend in silver prices started late last month and experts are bullish about the uptrend continuing for some time. This is despite the fact that silver prices initially spiked due to heightened retail trading amid comments on Reddit’s WallStreetBets forum. The comments called for retail traders to buy the white metal, as banks had been keeping prices “artificially low”.

Silver prices hovered near the $27.77 resistance level for most of the day on Monday, but finally breached the $28 per ounce mark late evening.

Investor sentiment was lifted by reports of a shortage in silver due to rising industrial demand for the metal. The metal is used by various manufacturing industries, including electronics, EVs, and solar panels. The rapid expansion of the EV market worldwide could result in substantial growth in the demand for silver.

The International Silver Institute expects demand for the white metal to grow by 11% year-on-year in 2021. The organisation also predicted that silver prices will continue to outperform gold this year.

Meanwhile, gold prices are being driven lower by optimism surrounding a global economic recovery. US stimulus and vaccine rollouts have improved the prospects of a global economic rebound being just around the corner, which continues to boost US Treasury yields, exerting pressure on gold.

Silver is being increasingly preferred by investors for portfolio diversification, to hedge against inflation and currency debasement resulting from the disbursal of coronavirus relief packages.

What to watch: Investors will keep an eye on US retail sales data and FOMC minutes, due later this week, which could determine the direction of silver futures.

The Markets Today

     

European stocks will be in focus today, after closing higher on recovery hopes.

Context: European stocks moved higher on Monday, although trading volumes remained exceptionally low with markets in the US, China, and Hong Kong closed for holidays.

Details: Investor sentiment for European equities were lifted by hopes of a faster global economic recovery, fuelled by news of vaccine rollouts.

European stocks followed the uptrend in the Asian markets on Monday, which saw the Nikkei 225 spiking past the 30,000 level for the first time in over three decades. Japanese equities were boosted by the country’s latest GDP growth data, which showed the economy expanding at an annualised pace of 12.7% in the final quarter of 2020.

The UK has administered the first covid-19 vaccine dose to more than 15 million people in its top priority categories. Global equities have risen for eleven straight sessions, with markets becoming more optimistic about a rebound in the global economy, given the acceleration in vaccination programs and increased fiscal relief packages.

The pan-European Stoxx 600 gained 1.4% on Monday, backed by a 4.2% jump in media stocks.

What to watch: Investors will keep an eye on the discussions among Eurozone’s finance ministers on the region’s economic outlook. Markets also look forward to earnings releases by Credit Suisse, Daimler, Deere, and Nestle.

Other Markets: Asian trading indices were higher at 6am GMT, with the Asia Dow, Nikkei 225, Hang Seng, and Shanghai up by 0.89%, 1.28%, 1.77% and 1.43%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

France’s unemployment rate, Romania’s GDP, Hungary’s GDP, Netherlands’ GDP, Italy’s balance of trade, Cyprus’ GDP, Eurozone’s employment change, GDP and economic sentiment, Germany’s economic sentiment, Saudi Arabia’s inflation rate, Russia purchasing prices, as well as the US NY empire state manufacturing index.

 

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