are waiting with bated breath for the bearish trend in gold
ratio to resume during which silver
They expect the gold
ratio to fall to 72 and then to 68 before it starts rising again. However, international experts suggest headwind for silver
before it outperforms gold.
During the recent rout in base metals, following the trade war triggered by the US, ratio punters were proved wrong and silver
price fell sharply compared to gold.
As a result, the ratio of gold
price has also seen some increase in the last few days.
are related metals with the white metal more volatile between the two. The ratio represents how many ounces of silver
can be bought with one ounce of gold
and at present the ratio is around 78. It was 82 in April and fell to 75 last week. The ratio falls when silver
price rise is faster than gold
or the white metal falls slower than gold.
Bears in the gold
ratio segment sell gold
in futures or options and buy silver.
The ratio falls when silver
The positions are built exactly in proportion to the ratio between the prices of gold
Ajay Kedia, director, Kedia Commodities, said, “In our polling of traders, we have seen that majority expect the ratio to fall to first 72 and then even 68 in the next three months. Immediately, the weakness in silver
may result in the ratio consolidating around the current levels with a mild upside bias.”
On the MCX, overall open interest has increased in the last few days in gold
As of now, top trades on MCX
are showing higher short positions for gold
Analysis of the top 10 long and short positions in gold
as well as silver
shows that short (bearish) positions are 14-15 per cent higher compared to long (bullish) in both the precious metals.
However, recently, silver’s correlation with base metals has increased and in line with the fall in metals, silver
fell sharply compared to gold
thus raising the ratio.
Philip Newman, director of London-based research firm Metal Focus, said, “Looking ahead, in the immediate future silver
faces headwinds on several fronts.”
His report highlights the concerns for silver
as professional traders are not upbeat towards the precious metals, which have been exacerbated by the impact of a resurgent dollar.
The agency also notes that despite the recent fall in US equities many investors still view the slide as a pause, before equities resume their upward momentum.
Metals are falling on trade war fears which destabilises markets and therefore silver
is also witnessing a downtrend.
Kedia, however, is of the view that silver
will find support from physical buyers because at lower levels Indian investors buy silver.
As seen now, at lower levels, silver
stops falling but base metal prices continue to fall.
prices in the international market have corrected from over $1,300 per ounce to $1,273 and silver
from the recent high of around $17.35 per ounce to $16.28. Spot price of standard gold
in Mumbai was at ~30,620 ($450) per 10 gram while silver
was ~38,535 ($566) per kg.