Commodity Roundup: Silver prices at 2-year high, analysts expect retreat in gold

Spot gold prices (XAUUSD:CUR) eased slightly on Tuesday after clocking a fresh record-high, as the U.S. dollar held firm, while silver prices topped $26 an ounce, trading at its highest level in 2024.

Year-to-date comparison of gold and silver, vs dollar:

Analysts remain divided over the reason for the rally in gold over the past month, with Commerzbank arguing that a significant change in U.S. interest rate expectations, normally the main driver of gold, cannot adequately explain the rise in March, which was the strongest for a single month in a good three-and-a-half years.

Analysts and ING meanwhile said that ETF holdings in gold continue to not align with price action. ETF holdings continue to decline, standing at around 82moz, down from 85.6moz at the start of the year, the brokerage said. “There is plenty of room for investors to buy the gold market, but maybe we need to wait for the Fed to actually start cutting rates before investors jump fully into the market.”

Further volatility in gold is likely this week, particularly with the U.S. jobs report scheduled for later in the day. “Gold remains in overbought territory and so there is certainly the potential for a pullback in the short term, particularly if we get a strong jobs report on Friday,” ING added.

Meanwhile, prices of silver, which often tracks movement in gold, rose to a 2-year high of $26.55 per troy ounce and gained more than 4% in the previous session. In contrast to gold, ETF investors appear to be turning back to silver. According to data from Bloomberg, they have bought almost 1,200 tons of silver in the last three weeks, meaning that silver ETF holdings have risen by 570 tons since the beginning of the year, Commerzbank’s Carsten Fritsch said in a note.

Turning to energy commodities, oil prices gained, with Brent topping $89 a barrel, amid supply risks following attacks on Russian refineries and widening Middle East conflict. Both Brent and WTI climbed 1.7% during the previous session to their highest since October.