(Kitco News)- After alackluster start to the year, silver is starting to show some relative strengthagainst gold but this trend might not last, according to one UK-based researchfirm.
The gold/silverratio has dropped more than 4% since its recent highs two months ago and is currentlytrading at 77.72 points, as silver prices are pushing to a three-week high and aretesting resistance below $17 an ounce, while gold is struggling around $1,300an ounce.
“Silver’s outperformance could be just the white metalplaying catch up with gold after underperforming for most of 2017,” said SimonaGambarini, commodities economist at Capital Economic, in a report Thursday. “What’smore, silver tends to outperform gold when industrial metals prices are alsorising.”
However, Gambarini said that she sees three reasons why silver’soutperformance won’t last: industrial demand is expected to fall as China’seconomy weakens, overall weak silver demand and short-term speculativeinterest.
“Overall, we are happy to reiterate our view that the silverprice will end the year at around $16.00 per ounce, down from $16.85currently,” she said. “Given that we expect the price of gold to end 2018 ataround current levels of $1,300, the gold/silver price ratio should bounce backto 82, up from about 78 today.”
July Comex silver futures last traded at $16.73an ounce, up 0.22% on the day; meanwhile August gold futures last traded at$1,301.40 an ounce, unchanged on the day.
By Neils ChristensenFor Kitco News
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