Gold Silver Reports – In my previous commentaries, I expressed some concern that the lag in the silver price vis-à-vis gold was a slight concern for the nearterm outlook. The path of least resistance for gold and gold mining shares was of course still bullish, but silver’s failure to fully participate in gold’s recent gains was a fly in the ointment.
Silver Finally Confirms Gold
That’s no longer the case after Wednesday’s blow-out day across the precious metals complex. The white metal conspicuously outperformed gold and finallyjoined the yellow metal in making a higher high. In this commentary, we’ll review the near-term forecast for gold in light ofthe latest developments and discuss why goldmining stocks have attracted the attention of serious investors.
Gold prices posted yet another impressive performance on Wednesday, hitting their highest since August 2016. Silver rallied by an impressive 3 percent and hit a 4-month high, closing at $17.57. Mainstream financial media outlets meanwhile have characterized gold’s strength as a simple-matter of investors purchasing insurance against possible inflation. The U.S. dollar index (DXY) fell to a three-year low on Wednesday (below) in its biggest one-day drop in 10 months, after Treasury Secretary Steven Mnuchin said a weak dollar is good for U.S. trade.
Read More: Gold Silver Mat Karna Sell Gold Target $1392—$1410, Silver Target $18.20—18.60
As I’ve argued in recent commentaries, the weak dollar is the driving factor behind the gold rally but not because of any inflationary threat or investor concerns over a currency war. Rather, the weakening dollar can be attributed primarily to improvement in the global economy and a reversal of the safe-haven attraction of the U.S. dollar among foreign investors in recent years. Now that the eurozone is on the mend along with other industrialized nations, foreign currencies like the euro are strengthening as investors regain confidence in the global economy. This means there is less demand for dollars by foreign investors, hence a weakening of the dollar’s value. This, in turn, bodes well for the gold price forecast. – Neal Bhai Reports
