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Why is silver rallying now?
Silver has rallied around 11% in the past five days. So why such a dramatic rise now? Saxo Bank’s Head of Commodity Strategy, Ole Hansen says it’s largely down to China. Better than expected trade balance numbers indicated an increase in demand for industrial metals. With the growth outlook for China and Europe stabilizing, traders jumped in to to take advantage of a silver price that was hovering close to 2010 levels.
Silver is notoriously volatile however. The big question remains for how long can this rally be maintained? Ole says a lot depends on whether gold, which has also risen, can break through some key resistance levels.
Ole says silver should find some resistance around the 22 dollars an ounce level. Gold has been driven more by short covering than actual new buying and for this to change, a foothold above $1350 needs to be established.
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