By Melissa Pistilli
Precious metals prices are on a tear this week with gold reaching over the psychologically important $1,000 an ounce mark, the first time in six months, and silver hitting a 13-month high of $16.80 an ounce on Tuesday.
Both gold and silver are reacting to inflation fears and dollar weakness in the market. “The market thinks inflation is coming,” said Leonard Kaplan, the president of Prospector Asset Management.
The silver spot price is expected to move higher following gold, but “significant and sustained momentum” is needed, says Forex analyst Anna Coulling, if the white metal is to break out above $18.50 and test last year’s high of $21 an ounce.
Many analysts believe gold may climb to $1,200 in the near future, especially if inflation becomes a reality. If gold can maintain its hold on the $1,000 level and advance further, spot silver will power through its own resistance levels.
But, investors would be wise to tread into the market cautiously as many factors indicate that silver may be overbought at these levels and experts are anticipating a downward correction before any more significant gains can be made.
Keep an eye out for this reaction in the next week or so as it presents an awesome buying opportunity for serious investors to get into the precious metals market or to expand their existing exposure ahead of what could possibly be a sizable breakout.
In a bull case scenario, say BMO Capital Markets analysts David Haughton, Andrew Breichmanas and Bart Melek, silver could reach over $22 an ounce next year.
In his most recent Silver Market Update, analyst Clive Maund sees silver breaking out of the $16 resistance area and moving “to challenge its highs in the $21 area” as gold itself makes significant advances.
We’ve been hearing a lot of buzz about these levels from silver and gold buffs for sometime now, but with inflation concerns heating up, recovery in base metals like copper and now China urging its citizens to invest in precious metals, it could soon prove more than just hype.
“For the really brave,” says Arabian Money’s Peter Cooper, “this could be the last big chance to buy junior exploration stocks at bargain levels.”
Courtesy: Silver Investing News
