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Silver Sees Best Session In Eight Weeks; Now What?

(Kitco News) - The silver market ended Wednesday with its biggest one-day gain since April 19 as analysts say the grey metal is playing catch up with the gold market.

Wednesday, July Comex silver futures settled the session at $16.985 an ounce, up 3.5% on the day. At the same time, August Comex gold futures settled the day at $1,262.30 an ounce, up 1.2% on the day.

Phillip Streible, senior market strategist at RJOFutures, said that he is not surprised that silver is starting to outperform gold. He noted that silver was a lot more beat up falling more than 11% in last month’s correction, while gold only lost 6.5%.

“In a day that saw gold perform really well, it is not surprising to see silver outperform,” he said. “I think it is one of the most undervalued metals even at $17 an ounce.”

Sean Lusk, director of commercial hedging with Walsh Trading, agreed that silver is a little more attractive as an investment compared to gold because of its sharper selloff.

“We are seeing a continuation of buying that started Friday after markets starting repricing Federal Reserve interest rate expectations,” he said. “I think silver has come down to a level that makes it an attractive buy back for traders.”

Streible added that silver could be benefiting Wednesday as a straight commodity playe as Chinese import data overnight showed decent demand for commodities.

Looking at where silver could go in the near-term, with the metal closing above initial resistance at $16.95, analysts at iiTrader said that the next level they are looking at is between $17.135 and $17.32.

Streible said that he is cautiously optimistic on silver as there are still some headwinds the market faces. He added that there is a lot of money sitting on the sidelines.

“I think we need to see gold recapture its recent highs and a push above $18 [in silver] would go a long way to attracting new momentum in the marketplace.”

By Neils Christensen of Kitco News;



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