“Chinese investors usually build their inventory before going for two-three weeks of New Year leave. They aim to restart factories with a full raw material quota. Hence, the upsurge in demand for industrial commodities has pushed silver prices
up. Also, indications of easing trade tensions between the US and China has supported industrial commodities and silver is no exception,” said Ajay Kedia, director, Kedia Stock & Commodities Research, a city-based equity and commodities broking firm.
Gold also followed suit, albeit slowly. China and the US agreed to ease trade tensions, thus reducing risk appetite for the yellow metal against inflation hedge.
At Zaveri Bazaar, the gold price jumped 2.7 per cent in the last two weeks to trade at ~38,635/10g on Thursday, from its recent low of Rs 37,615/10g. Gold had hit a record price of Rs 39,031/10g on September 4.
Spot gold advanced as much as 0.4 per cent to $1,505.62/ ounce, the highest intraday price since November 5, and was at $1,504.08 at 1046 GMT (4:16 pm) in London.
After hitting a low of $57.77/barrel on October 2, the crude oil price also recovered trade at $67.09/barrel on Thursday, almost near its recent peak of $68.38/barrel on September 15.
The rise in demand for silver is coming from the automotive sector for battery production. Around two-thirds of global silver production is used for industrial consumption. Hence, its demand and price are determined by the consumption trend in the industrial sector.
The gold-silver ratio had hit the level of 94 in July, the weakest since 1991; the comfortable level is around 66.
“Going forward, there is more upside in silver than gold,” said Gnanasekar Thiagarajan, director, Commtrendz, a city-based commodity broking firm.
Meanwhile, the US economic data continues to pose a risk as new orders for key US-make capital goods barely rose in November and shipments fell. This suggests business investment will probably remain a drag on economic growth in the December quarter. Analysts, meanwhile, fear that the tariff war with China would continue to weigh on the US economy in 2020..