Silver price shoots higher, stocks continue to rally

The price of silver leapt higher again early Thursday, taking it to its highest since February 2nd. On this day, the price put in a big daily reversal and continued to slide from over $24 per oz down to below $20. Now, the precious metal could be on the way for another re-test of the big $25 level.

Across broader markets, it was another winning day for stocks. The FTSE 100 closes higher for a third day, while across the pond, the Nasdaq led Wall Street with a 1.8% daily gain. As prices rebound as more days pass without another failed bank, investors are growing more bullish.

Key Factors for Today

• European markets are set for a positive open
• US futures point to little change at the open on Wall Street
• Asian markets mostly rise, Nikkei declines

• Lululemon jumps 12% after earnings show good holiday season sales
• Infineon Technologies AG up 6% after well-received quarterly results

Market movers

• Silver breaks out, highest since Feb 2
• FTSE 100 closes over 7500, targets 2-week highs
• DAX highest since Mar 10, brushes off DB worries
• USD/JPY jumps 150 pips, just under 133
• USD/CAD drops to lowest since Feb 27

Econ Calendar

• Eurozone Consumer Confidence (10 am)
• German Prelim CPI (1 pm)
• Core PCE Inflation (1.30 pm)
• Initial jobless claims (1.30 pm)

Earnings

• Agricultural Bank of China
• Great Wall Motor Co.
• Swedbank AB
• Manchester United
• Rumble Inc
• Blackberry Ltd

Silver leads gold on Fed pivot bets

Both gold and silver enjoyed a huge month of March as investors priced in a likely pivot from the Federal Reserve away from rising interest rates. Non-yielding assets like commodities tend to benefit from a low-yielding environment.

While gold has consolidated since it tagged $2000 per oz around 10 days again, silver has continued to advance. The gains over the month have almost fully recouped the sharp losses at the start of February.

Whether these price gains are sustainable likely rests on the outlook for inflation in relation to Federal Reserve policy. Investors are buying gold as a hedge against the possibility that the Fed and other global central banks will be forced to cut interest rates to stave off a financial crisis while inflation rates are still above target.

If there is a sense that central banks are reneging on their mandate of price stability, investors could flood out of cash and into hard assets like gold and silver. However, should inflation continue to come down or a financial/banking crisis never materialises, metals prices could come back down to earth.