The slowdown of the US dollar and the stock market rebound seen in the last few hours of the previous week triggered a quick rally of the silver price. The precious metal rebounded from $18.5 to $19.4, before slightly declining in the early trading this morning to $19.25.
According to a Wall Street Journal report, Fed officials are still uncertain about the interest rate decision that will be taken in December and there could be a chance of seeing a smaller hike (50bps instead of 75bps). Following these rumours, stocks jumped, with the Dow Jones index climbing to 31,000 points. This rising sentiment also boosted precious metals, which were aided further by the decline of the greenback.
Despite the recent rebound, the silver price is still posting a 20% loss on its year-to-date performance. Additionally, the comparison with gold is showing relative weakness, as the yellow metal lost around 10% less, while the gold/silver ratio jumped to 89.
On the other hand, this situation could be seen as an opportunity. Indeed, the ratio between the two metals is well above the historical average. Moreover, from a fundamental side, the demand for silver is expected to remain solid in the next few years.
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