Silver prices bounce back 5.1% to $35.05/oz

(Commodity Online): COMEX prices extended their gains for the fifth day in a row on Thursday mainly led by silver, after a European Union summit agreed on a 50-percent haircut on Greek bonds, bank recapitalisation and leveraging of the bloc’s rescue fund. Silver prices bounced back to $35.05/oz, a five-week high while the PGMs gained over 2%, reported Barclays Capital.

Spot silver gained 5.1%, on course for a 12.6-percent weekly rise — its biggest in more than three years. The gold-silver ratio, used to measure how many ounces of silver is needed to buy an ounce of gold, fell to a one-month low below 50, bank stated.

According to Barclays, entire complex including Gold received a boost following the EU summit delivering an agreement, which was broadly in line with expectations. Although a significant number of uncertainties remain, the market accepted the news positively.

Barclays economists note progress has been made on several bank support strategies in the area of unsecured term funding and bank capitalisation. However, the summit has not produced measurable results on various key issues, such as how to deal with Greece with respect to the scope of the private sector involvement while the news of the EFSF has been patchy at best. Equity markets rallied and the euro strengthened to levels against the dollar last seen in early September.

Barclays FX strategists note the relief rally may have further to run but uncertainties remain acute and they expect a dovish tone at the ECB meeting and press conference in a week thus continue to expect euro depreciation relative to the dollar.

Gold gained 1.2% to settle at $1744/oz, a one-month high. Gold ETP holdings fell by a modest 0.6 tonnes on Thursday but after the growing demand this week, flows have turned positive for the month at 12.6 tonnes. We retain our positive view on gold, as the macro backdrop remains supportive.

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Posted by Silver Guru on Oct 29 2011. Filed under Silver prices. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry