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Gold Finds Itself Loveless Again as Silver’s Shine Fades

CommoditiesFeb 02, 2021 03:48PM ET
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By Barani Krishnan

Investing.com - All good things have come to an end, as the saying goes. Such was the case with gold on Tuesday, though its one-day rally was too short to begin with.

Metals markets across the board lost some 1% to 9% of their value after the Reddit community’s vehement denials of running up silver prices in the same fashion as GameStop (NYSE:GME) shares began to sink into the trade.

Silver futures for March delivery on Comex settled down $3.02, or 10.3%, at $26.40 per ounce, losing more than Monday’s 8.5% gain which briefly propelled them to 8-year highs above $30.

Tuesday’s slide in silver came after higher margin limits imposed by exchange regulator CME that simply meant higher upfront cash needed by anyone trading the metal. Also weighing on metals and most other commodities was the 8-week high on the Dollar Index, which returned to above 91 mark the first time since early December. The dollar strengthened on signs of some legislative hurdles for the Biden administration $1.9 trillion Covid-19 relief plan.

Despite its correction, March silver remained more than $2, or 9%, above the five-week low of $24.22 it hit on Jan. 17, before the start of a two-week buying mania that lifted the white metal.

The same could not be said for gold. The yellow metal’s futures for April delivery tumbled $30.50, or 1.7%, to settle at $1,863.90. April gold had risen just 0.7% on Monday, after declining 0.3% all of last week.

“Precious metals have lost their lustre,” Eric Scoles, market strategist at Blueline Futures in Chicago, said in a commentary. “The prospect of easy money is starting to look a whole lot harder.”

“Silver is likely deflating alongside all the other targets of the recent investing mania. Gold has fallen down towards the bottom of the trading range it's been trapped in since early January. Gold is a lame duck right now, it's bearish but apparently not yet enough so to break support and pick a direction other than sideways.”

Ed Moya, senior market strategist at New York’s OANDA, had a similar view.

“Today’s selloff in the precious metals is not the beginning of a new trend, but a stronger dollar and a booming stock market spells trouble in the short-term,” he said.

Moya noted that gold ETF holdings dropped for a fifth straight day, although silver could see some fundamentally-driven physical buying.

“Silver will benefit from tremendous industrial demand later in the year and as many retail traders will likely hold onto their silver coins that have yet to be delivered.”

Gold Finds Itself Loveless Again as Silver’s Shine Fades
 

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Comments (6)
The Chad Bull
The Chad Bull Feb 02, 2021 10:40PM ET
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Title revision- “JP Morgan manipulates the precious metals markets again”
Barani Krishnan
Barani Krishnan Feb 02, 2021 10:40PM ET
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True, Chad.
John Patrick
John Patrick Feb 02, 2021 10:21PM ET
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Wall St dumped 2 billion ounces of PAPER CONTRACTS on the market (hats 2 years of Physical production in one night). Paper certainly takes the shine out of silver but not for long. Keep buying physical silver if you can find it!!
Freddy Esc
Freddy Esc Feb 02, 2021 7:57PM ET
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Short lived, the price of silver and gold is only going up as the dollar weakens. Miners doing good soon.
Jan Buyle
Jan Buyle Feb 02, 2021 6:28PM ET
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Paper gold and silver were pushed down again today, indeed. But it is impossible to buy physical silver without paying a 35% premium these days. Maybe think about that? Hold on to your physical silver and solid silver miners like AG, CDE, EXK, PAAS, etc !
Liam Andrade
Liam Andrade Feb 02, 2021 6:14PM ET
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Hoping silver and gold crashes so I can buy up while people still think the dollar is worth something.
John Healy
John Healy Feb 02, 2021 4:25PM ET
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I still love gold and silver. I hope they continue to sell off so I can buy more.
 
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