Silver bullion

  • Silver has now gained more than 30% since the start of the year, and has rallied this week, likely driven by positive news from promising COVID-19 vaccine candidates and the European Union's R14 trillion recovery package aimed at long-term investments.
  • The commodity may benefit from the "buy-everything" global reflation trade prevalent in markets this week, a market analyst at OANDA said.
  • "The reopening trade is triggering strong industrial demand for silver and now that the $20 level has been cleared, bullish momentum might not see much resistance until its closer to the $22.50 level," according to OANDA's Edward Moya.
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Silver has rallied this week - gaining as much as 7% on Wednesday - the latest surge in the precious metal's 85% price increase since March. 

"Silver may have been the beneficiary of a double whammy," Jeffrey Halley, an Asia Pacific senior market analyst at OANDA said in a Wednesday email.

"Firstly, as the poor man's precious metal, catching gold's tailwind from negative real yields across the US yield curve. Secondly, it has industrial applications and will thus, benefit from the buy-everything global reflation trade prevalent in markets this week," he wrote.

Silver has "serious liquidity issues" when compared to gold futures, which means that when the commodity sees price movements, they can be extreme, he said.

He noted that until silver has a severe setback, the momentum in stock markets, energy, and commodities driving it higher is unlikely to waver.

On Thursday morning, silver was trading at $22.50 - after trading above $23 on Wednesday.

"The reopening trade is triggering strong industrial demand for silver and now that the $20 level has been cleared, bullish momentum might not see much resistance until its closer to the $22.50 level," said OANDA's New-York based senior market analyst Edward Moya.

The European Union's R14 trillion recovery package may have lent a helping hand to the commodity's boost as leaders announced long-term "green and digital investments" for the reconstruction of the bloc.

Market sentiment was also lifted by positive news from data on a COVID-19 vaccine by candidates including AstraZeneca, Moderna, and Pfizer this week.

A slew of business and consumer confidence data is expected to hit across Europe and should display a generally improving trend as the Eurozone rebounds from lockdowns, Halley said.

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