Strong inflows to exchange-traded funds gave a searing surge more momentum, putting silver on track for a second weekly gain.
The white metal held near a record of about $59 an ounce set earlier in the week, rising as much as 2.4% on Friday. Despite indications that silver's gains may be overdone, the total additions to silver-backed ETFs in the four days leading up to Thursday are already the most for any entire week since July, a clear indication of investor interest.
According to Dilin Wu, research strategist at Pepperstone Group Ltd., "these flows can quickly amplify price moves and trigger short-term short squeezes."
The gold's 14-day relative strength index has fluctuated on either side of 70 for the whole of this week; above this level, traders are likely to consider the commodity to be overbought.
The value of silver has nearly doubled this year, surpassing the 60% increase in gold. A record squeeze in London contributed to the rally's acceleration during the past two months.
As more metal was sent to the largest silver trading hub in the world, the shortage has lessened in recent weeks, but supply limits are now being seen in other markets. Inventory levels in China are almost at their lowest point in ten years.
Rising hopes that the Federal Reserve will cut interest rates at its meeting next week have also contributed to the metal's recent ascent. Swap contracts show a near-certainty that the Fed will lower borrowing costs, which is usually advantageous for non-yielding precious metals.
The most recent US employment data, which revealed jobless claims dropped to a three-year low, did not affect these wagers. According to a report from Citigroup Inc. analysts, including Max Layton, silver might reach $62 per ounce in the next three months "on the back of Fed cuts, robust investment demand, and physical deficit."
Silver is used in a variety of items, including circuit boards, solar panels, and coatings for medical devices, in addition to its worth as an investment asset. For five years running, the demand for the metal has exceeded mine output worldwide.
According to Hebe Chen, an analyst with Vantage Markets in Melbourne, "Silver's outsized rally signals it's no longer gold's quiet sidecar." "Structural scarcity and rapidly increasing industrial demand not just the haven story are awakening the market."
After a 13% increase the previous week, silver increased to $ an ounce as of 9:27 a.m. in London, up more than 2% for the week. Platinum and palladium also increased, and gold reached $ an ounce. The Bloomberg Dollar Spot Index saw a little decline.
