The disconnect between the gold and silver prices continues to widen with silver treading water around $24 an ounce while gold climbs above $1,900 an ounce.
After a strong finish to 2022, silver is struggling to find fresh support to drive it higher even though the macroeconomic environment is turning more favourable and industrial demand for the metal remains strong.
The latest US inflation data showed the pace at which consumer prices are rising continues to slow, increasing the breathing space for the Federal Reserve to be more modest with its upcoming interest rate moves. Yet while gold has benefited from the prospect of fewer rate hikes this year, its fellow non-yield bearing asset in silver has barely moved.
A second consecutive supply deficit in 2022 for silver and signs that fears of a global recession in 2023 may be overdone, with the UK posting some positive GDP numbers, would both point to silver likely to rise. Yet the price seems unable to break through resistance at $24 for now.
This looks like a clear buying opportunity with the gold/silver ratio now above 80 and silver still comfortably below its 2022 high even though the outlook is far more bullish now than it was back in March when it briefly climbed above $26 an ounce.
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