Silver price soars to $37, outshining gold as Middle East tensions build
BY
Ben Graham
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Silver pierced the $37 level for a fresh 13-year high on Tuesday, as market sentiments shifted towards risk-off assets amid rising tensions in the Middle East.
Spot silver jumped as much as 2.2% to $37.26 per ounce, its highest since early 2012. Silver futures saw a similar rise, trading as high as $37.33 per ounce in New York.
Silver’s breakout follows speculation that the US is preparing for a more direct intervention in the Israel-Iran conflict, adding further uncertainty to global markets.
Gold muted
During times of crisis, investors tend to seek safe haven in precious metals like gold and silver.
However, despite this narrative, gold saw a much less drastic movement, with spot prices hovering just below $3,390 an ounce for a 0.2% gain.
This further stretches the divergence in gold and silver seen in the past week, with the gold-to-silver price ratio now hovering near a three-month low.
Before Tuesday, the two metals have moved in opposite directions for four straight sessions. According to BullionVault, gold and silver prices have traded the same direction on 78.9% of all trading days over the past half century, and 75.7% of the time over the past 12 months.
“At first sight, gold’s reaction may be surprising, considering the potential consequences of the conflict and also the typical skittishness of the more short-term-oriented traders in the market,” Carsten Menke, head of next generation research at Julius Baer Group, told Bloomberg.
“But a closer look suggests that it is in line with the historical pattern of such geopolitical shocks not lastingly lifting gold prices.”
“Gold’s pause bodes well for the next leg higher,” Swiss bank UBS said in the BullionVault report, emphasizing that gold’s bullish sentiment “is unchanged.”
“Gold is on track to target [April’s all-time high] at $3,500 again,” MKS Pamp strategist Nicky Shiels stated, because the outbreak of direct Israel-Iran conflict gives “a new catalyst with nuclear/WWIII risk.