Prices for gold and silver both ended a third straight week of declines, with front-month gold dipping below the $1,800/oz level Friday while silver settled at its lowest price in two years.
Adding to steep Q2 losses, Comex gold (XAUUSD:CUR) for July delivery (XAUUSD:CUR) fell 1.5% for the week to $1,798.90/oz, while July silver (XAGUSD:CUR) sank 7.2% to $19.597/oz, its lowest finish since July 2020 and down 13% YTD after shedding 3.4% on Friday.
ETFs: (GLD), (GDX), (IAU), (NUGT), (PHYS), (NYSEARCA:SIL), (NYSEARCA:SLV), (SIVR)
“Central banks are only picking up speed in tightening monetary policy, creating pressure on long-term inflation expectations,” FxPro analyst Alex Kuptsikevich told MarketWatch. “In such an environment, demand for gold as insurance against inflation promises to decline in the coming weeks.”
“Besides the falling gold price, silver is being additionally depressed by the very weak base metals prices. This is because silver is not only an investment metal but to an equal extent also an industrial metal,” Commerzbank analysts explained, noting that the ratio of gold to silver prices has climbed to its highest in two years.
Silver prices likely will test pre-COVID lows in an environment of rising U.S. rates, a stronger dollar and increasing U.S. recession risks, UBS analysts said.
UBS expects silver will test $19/oz and possibly early-2020 levels of $17-18, advises investors against adding silver exposure and “to hedge their long silver positions over the next six months.”
Silver “appears to be relatively undervalued/underpriced vs. both copper and gold, [and] is statistically due for a meaningful move higher soon,” Paul Franke writes in a bullish analysis posted recently on Seeking Alpha.