SILVER PRICES exploded for a third day running in London on Tuesday, jumping another 3% to reach what technical analysts called key technical levels at $16.05 per ounce and outpacing gold as the Dollar weakened following the worst US trade deficit data for 7 years.
Reversing all of the last 3 month’s drop to new 6-year lows against the Dollar, silver also shot higher for Eurozone and UK investors, breaking sharply above €14 and adding almost £1 since a week ago to near £11 per ounce.
With Chinese markets still closed for the week-long National Day celebrations, gold also rose but again lagged silver prices, touching 7-session highs just shy of $1150 per ounce – a new half-decade low when first reached on the way down last November.
New York stock markets meantime fell, and European equities cut earlier sharp gains, after new data showed the US trade deficit yawning to the widest August gap since 2008 at $48 billion on a 4-year low in export sales.
“Short term a rebound is on” in silver prices notes one bullion bank’s technical chart analysis today, with the metal peaking 10% above last week’s close to September, and gaining over 14% from August’s new 6-year lows at $14 per ounce.
Silver turns over one-tenth as much as gold by Dollar value in London’s professional bullion market, center of the world’s wholesale physical trade.
Daily price history since 1968 show silver moving 1.75% for every 1% move in gold, both up and down.
Bearish betting against silver by money managers trading US Comex futures and options grew 15% in the week ending last Tuesday, latest data from regulator the CFTC say, reaching a gross notional short position of $2.4 billion.
Managed-money long positions held unchanged at $3.1bn, some 29% larger.
Gold futures and options, in contrast, saw hedge-fund and other speculative financial players cut their Comex short bets by 15% last week, down to $8.5bn against bullish bets some 55% greater, equal to $13.2bn of metal.
“Silver’s interim low” around the $14 level, says Karen Jones in her Bullion Weekly Technicals for German bank Commerzbank, has been “reinforced [since August’s low] gearing up for a challenge of the 200 day moving average at $16.04” per ounce.
Gold has meantime “tested and seen a strong rebound from the 3-month uptrend at $1104,” Jones adds, “and is expected to tackle the 2015 downtrend [now at] $1150.”
“Short term,” agrees Stephanie Aymes in her technical analysis at French investment and bullion bank Societe Generale, “gold looks poised to inch higher towards $1148/1152 – the descending trend line.”
Further “upside [is] limited” however, says Aymes, because the recent August and July highs of $1163 and $1173 respectively on gold’s price chart “remain an important resistance.
“Only a break above [that level] will mean an extended rebound” for gold prices.