Silver price (XAGUSD) jumped to the highest level since September last year as traders reacted to the latest upgrade by Citigroup. The metal is trading at $19.45, which is its highest level since last year. The surge means silver has gained more than 71% from its lowest point in March.
Other metals too have risen, with gold price jumping by 0.10% and platinum price rising by 0.78%. On the other hand, palladium and copper price have dropped slightly.
Citi expects copper price to hit $25
Citigroup, the giant bank valued at more than $100 billion, released a report earlier today, predicting that gold and silver price will continue to rise.
In making the cases, the analysts said that a lose monetary policy, low yields in the bond market, high dry powder, and increased asset allocation would help push metal prices higher. They now believe that gold price will hit $2000 in the next few months. They said:
“Nominal gold prices have already posted fresh records in every other G-10 and major emerging market currency this year.”
Gold and silver have been in an upward trend this year, with gold price rising by 19% YTD. Silver price too has managed to recover after falling to a multi-year low in March.
Silver price (XAGUSD) pair is benefiting from several aspects. On the one hand, supply of silver metal has been affected by the coronavirus pandemic. A few miners have had to either close plants or reduce the amount of work done.
At the same time, demand has been rising as economies recover. Also, strong demand from ETFs has also increased. For example, a report by ETFTrends showed that ETFs tracked by Bloomberg saw inflows of 2,479 metric tons between April and May.
Further, silver bulls argue that the silver to gold ratio, which has fallen to 92 is another sign that silver price is undervalued.
According to Citi, these factors will help to push silver price to $25 by the end of the year. If it does this, it will mean that the price of silver has gained by more than 100% from March and 30% from the current level. Also, the bank expects palladium price to jump to $2,200.
Dow Jones ended 2.32% higher at 25,595 after the index tested and bounced from the 50-day moving average. The index rejected several times the last two weeks at the 200-day moving average. The short term picture has improved after yesterday’s gains, but the long term outlook remains bearish below the 200-day moving average.
On the upside, first resistance for the Dow index stands at 25,601 the high from yesterday. A move above 25,601 might open the way for a test of 25,027 the high from June 24. If the bulls continue then the next supply zone for the Dow Jones is at 26,274 the 200-day moving average.
On the flip side, immediate support for Dow Jones index is at 25,096 the low from yesterday. Next support for the Dow Jones will be met at 24,952 the 50-day moving average. A break below 24,952 might open the way for a test of 24,755 the 100-day moving average.