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Current Highlights

Gold price in India hit Rs 50,000-mark, while Silver prices hit 64500 amid escalating Russia-Ukraine conflict

The United States and NATO said Russia was still building up troops around Ukraine despite Moscow’s insistence it was pulling back, questioning President Vladimir Putin’s stated desire to negotiate a solution to the crisis.

Data showed US retail sales rebounded sharply in January, but higher prices could blunt the impact on economic growth this quarter.

Bullion prices also got a lift from a slightly dovish Fed minutes which showed that Federal Reserve officials last month agreed that, with inflation tightening its grip on the economy and employment strong, it was time to raise interest rates, but also that any decisions would depend on a meeting-by-meeting analysis of inflation and other data

The US Dollar fell after the release of the minutes and lent support, however the benchmark bond ended steady above 2 per cent and capped further upside

Total global silver demand is forecast to climb by 8% to a record high of 1.112 billion ounces this year, according to the Silver Institute.

The Silver Institute forecasts growth of 5% this year for global industrial silver demand to a new high of 552 million ounces.

The Silver Institute, also expects physical silver investment demand to rise by 10% in 2022 to 290 million ounces, according to Michael DiRienzo, executive director at the Institute.

Gold/Silver Ratio

Gold Silver ratio is on important level of 80, with time fibonacci indicating high volatility will be seen in next few weeks

As precious metals begin to reverse course and rally, silver could have more upside than gold. 2021 was an odd year in the precious metal space, which struggled to gain traction in an unusual market environment.

“Silver had no life of its own this year, fluctuating merely in gold’s slipstream. On balance, it suffered disproportionately high losses as compared with gold. As a result, the gold/silver ratio has climbed from a good 70 at the beginning of the year to over 80 now,” said Commerzbank.

Despite often being dragged around by gold, silver has multiple functions. Like gold, it serves as an inflationary hedge. But silver also has a number of industrial uses, particularly in green energy technologies. If the headwinds that have been preventing a precious metal breakout begin to diminish — and it seems they might, given the current inflation environment — that could signal to investors that silver could get hot. The gold-silver ratio also indicates that silver is poised to break out.

“There’s certainly that catch-up story built in there. It has underperformed gold to date. And you’ll find some switching by investors into the silver market as a consequence of that,” said ANZ senior commodity strategist. The average gold-silver ratio in the modern era has been between 40:1 and 50:1, so the current number is an outlier.

Silver also benefits from strong showings in commodities. If the supply chain gets untangled, silver could benefit, especially given the focus on more environmentally friendly technologies. “The industrial component of the silver market will tend to benefit more against a macro backdrop, which is still resulting in above-trend growth on a global basis,” said Hynes.

“Silver can hold up relatively well off the back of the industrial component as opposed to gold over the next 12 months.”

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