Silver lags gold in ongoing rally

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Gold has really sprung into life over the last six weeks. In mid-February it was trading below $2,000 per ounce. Now it is over $2,250, registering a gain to date of 14%. Bear in mind, these gains have come even as the dollar is effectively unchanged over the same time period. And perhaps even more impressively, the Dollar Index has added 2.6% over the last three weeks, while gold has gained over 4% at the same time. This should be seen as a big wake-up call for all those who insist that there’s a negative correlation between the two. The fact is, as with most correlations, they work until they don’t. And at the moment, they don’t. Silver has also woken up recently, and was sharply higher this morning. It is closing in on $26 per ounce, a level which has acted as resistance for over two years now. If it can break above here this week, it could act as a strong reminder that silver is severely lagging gold’s gains. Bear in mind that while we’re seeing new record highs for gold, silver is a long way short of its own all-time high just shy of $50 from back in April 2011. But investors should be mindful of silver’s incredible volatility, and that trading it is not for the faint-hearted.

The chart above shows resistance around the $26 per ounce level. It also shows the upwardly-sloping trendline which has been building since September 2022. It’s encouraging to see that although the daily MACD is quite elevated, there’s a negative divergence which can also be add weight to the bullish viewpoint.