Silver Prices Jump Through $20, Yellen Fed "Gold Supportive" as Dollar Drops, All Asset Prices Gain
Thursday, 6/19/2014 15:29
SILVER PRICES led gold higher Thursday in London, rising 2.6% from last week's finish to break above $20 per ounce for the first time in two months as world stocks, bonds and commodities rose following yesterday's unsurprising US Federal Reserve decision.
Holding rates between 0% and 0.25% for the 66th month running, "Janet Yellen delivered a meticulously balanced message yesterday which was supportive for gold," says a commodities note from French investment and bullion bank Natixis.
Fed bond purchases for the coming month were cut by $10 billion to $35bn – just below the monthly addition to the Fed's asset purchases made in
September 2012's so-called "QE3" – while Yellen again stressed that interest rates won't rise any time soon.
"The vote was unanimous," notes one bullion dealing desk. "So even with significant personnel changes the Fed remains in harmony."
Wall Street's S&P 500 stock index ended Wednesday at new all-time highs, with most Asian and European stockmarkets following sharply higher on Thursday as government bond prices also rose, nudging interest rates down.
Crude oil pulled broad commodity benchmarks to 8- and 9-month highs as the US Dollar fell to 1-month lows vs. the Euro and near 6-year lows to the Pound, and the Iraqi army continued battling ISIS militants at the key Baiji refinery just north of Baghdad.
Both gold and silver prices ticked higher in late US trade last night, before flattening in Asia only to rise in London and then jump as New York re-opened Thursday.
Gold hit its highest level in almost 4 weeks at $1295 per ounce. Silver prices rose 30 cents in 90 minutes, hitting $20.24 per ounce – the highest level since 10 April.
Speculative "short betting" against silver prices earlier this month
hit all-time record levels, with hedge funds and other non-industry players holding bearish contracts worth $4.2 billion on official US data.
"Momentum indicators are bullish, suggestive of acceleration," said Scotia Mocatta's technical analysis of silver prices overnight, looking "to $20.00 as the next key upside level."
"Silver following gold," said Standard Bank's London team Thursday lunchtime, "up through the 100-day moving average at $20 and similarly running into very light selling."
"Turning neutral/bearish at these levels," the note adds. "Would expect seasonality to kick in: silver up 7% month-on-month at this point is unusual."
While physical gold demand in China has been muted however, according to several wholesale dealers' reports, "bullish silver price expectations" are driving strong imports of the white metal into India, says the latest Precious Metals Weekly from London-HQ'ed consultancy
Metals Focus.
After jumping on consumer substitution from gold as India's anti-gold import rules hit in 2013,
silver bullion bar inflows to India "have largely continued to rise," says the report, "with combined January-April inflows up an impressive 27% year-on-year.
"Our field research points to strong bargain hunting purchases having emerged" on April and May's silver price drop near 3-year lows.
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