Silver has outpaced the strength of gold's gain so far this year

By Myra P. Saefong

Gold futures post their 16th record-high settlement of 2024

Silver prices have gained ground on the heels of a rally in gold, with prices for the white metal on Thursday settling at a nearly three-year high and outpacing the strength of gold's gain in the year to date.

Prices for both metals had spent part of Thursday's session trading lower, despite a year-to-date climb in Treasury yields BX:TMUBMUSD10Y and in the U.S. dollar DXY.

"One of the more impressive features of this gold run has been how impervious it is to what have typically been big headwinds," Brien Lundin, the editor of Gold Newsletter, told MarketWatch.

Those headwinds include rising Treasury yields and a strong dollar, which Lundin said have had little influence on gold recently and "may have actually been helping it on some days."

On Thursday, gold futures for June delivery (GC00) (GCM24) tacked on $24.30, or 1%, to settle at a record high of $2,372.70 an ounce on Comex, up 14.5% year to date.

May silver (SI00) (SIK24) settled at $28.25 an ounce, the highest since May 18, 2021, and up 20 cents, or 0.7%, for the session. Silver based on the most-active contract has climbed for 11 straight sessions, the longest streak of gains since February 2014, according to Dow Jones Market Data. It's up 17.3% this year.

Gold defies headwinds

Gold's ability to rally despite typical headwinds from stronger Treasury yields and the dollar may have actually helped support the metal "on some days," Lundin said. This kind of buying reflects a "very large and somewhat price-insensitive appetite for gold."

He added: "That points to central-bank buying, but there may be more factors afoot."

Also read: Gold buyers are holding on to the precious metal as prices break records - and they're ready to buy more

The only areas of the market where "we have little visibility are the central banks and the [over-the-counter] options market, so if we're looking for other sources of demand, we can speculate that some actors are using the shadowy OTC market to either build large gold positions or cover large shorts," he said.

And of course, a rising market attracts its own demand from speculators, but the fact that gold exchange-traded-fund holdings remain relatively stagnant is a sign that this potential buying fuel remains largely in the tank, he said.

Old rules don't apply

Most precious-metal market observers, investors and traders are looking at this "relentless" move in gold and silver prices and still applying the old rules to the market, said Peter Spina, founder and president of investor websites GoldSeek.com and SilverSeek.com.

However, "this is a new game," he said. "You can see a major component of the gold demand taking place by watching its relationship to the strong U.S. dollar and rising rates. Central banks and other holders of Treasury debt are selling for dollars to buy gold."

Read: Gold hits another all-time high as investors take cues from near-record buying by central banks

Spina said he does not expect any meaningful pullback in gold and silver prices yet, and added that those who sold the metals in the last few days are likely "getting out too soon for the short term."

"The market moves to a new higher level, rests up there, and instead of a traditional price pullback after such a huge run-up, it gets bid up and starts running again higher," he said.

'The market moves to a new higher level, rests up there, and instead of a traditional price pullback ... it gets bid up and starts running again higher.' Peter Spina. GoldSeek.com and SilverSeek.com

That means the traders or investors who sold "will likely hop back in during one of the next waves higher, and that could be one of the final moves before a meaningful consolidation," he said.

Spina targets the $2,500-plus area in gold as the first potential spot where the market could see its "first meaningful pullback, but it could overshoot and jump hundreds of dollars higher first," he said.

Read: It may be silver's turn to shine after the gold rush to record high prices

Silver, meanwhile, has the "energy and fundamentals" to move the price past the $28.50-an-ounce technical resistance, and then $30 an ounce, Spina said. He expects silver prices to challenge $30 and then "likely jump over that price barrier" before seeing much of a price pullback, if any.

-Myra P. Saefong

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04-11-24 1513ET

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