GOLD PRICES erased a $15 overnight spike in London trade Tuesday, but silver rallied 1.9% from yesterday's 10-week low as the stock market in China – the world's largest manufacturing economy, and home to 4/5th of solar-panel production – paused its long decline, starting back at New Year 2021.

 

Trading back down to $2022 per Troy ounce – $40 below its record-high monthly finish to December – the price of gold rose for UK and Euro investors, retouching last weekend's levels around £1600 and €1865.

 

Silver prices meantime leapt after spiking down on Monday towards October's 7-month lows, trading back up to $22.40 per ounce for US Dollar investors.

 

Yesterday's steep plunge in the price of silver saw the precious metal's largest exchange-traded trust fund – the iShares Silver Trust (NYSEArca: SLV) – expand in size for the first time in 2 weeks, growing by 3.7% with its heaviest 1-day inflow of investor funds in exactly a year.

 

The biggest gold ETF shrank in contrast, with the SPDR Gold Trust (NYSEArca: GLD) needing 0.2% less bullion to back the value of its shares in issue.

 

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"The Gold/Silver ratio has ripped through 90," says bullion-market strategist Nicky Shiels at Swiss bullion refining and finance group MKS Pamp, "[back up] at levels last associated with extreme macro fear" such as Russia's invasion of Ukraine in early 2022 and the start of the global Covid Crisis in early 2020.

 

Tracking the price of gold in terms of cheaper, more industrially-useful silver, the Gold/Silver Ratio "is also ignoring trends from a sideways US Dollar and (expected) looser financial conditions from the Fed," says Shiels, pointing to US central bank's prediction of 3 cuts to Dollar interest rates in 2024.

 

 

"Silver is playing a contrary game," agrees bullion-market analyst Rhona O'Connell at brokerage StoneX.

 

"Although the long-term outlook for silver demand is very strong, driven particularly by the onward march of the solar industry – especially in China – and vehicle electrification, sentiment overall is still very cautious on the back of economic uncertainty and gold's stuttering performance."

 

Last week the global IEA energy authority warned that solar panels – now a key source of demand for silver – have hit massive oversupply in North America and Western Europe, with manufacturers cutting prices in half last year.

 

Swiss-based manufacturer Meyer Burger is threatening to shut its giant solar-panel plant in Freiburg, Germany unless new government subsidies help it overcome "a deteriorating market environment" for new photovoltaic power installations.

 

But in China – which last year invested $130 billion into its solar energy industry, according to analysis from specialist consultancy Wood Mackenzie, bringing its installed capacity up towards 1 terawatt – prices for silver suggest strong demand, with Shanghai's benchmark running at the equivalent of $25 per Troy ounce or more since the middle of November.

 

Shanghai silver prices today fixed $2.90 above London quotes, offering a strong incentive to new imports. Pricing in India and Turkey also suggests stronger demand, says Shiels at MKS Pamp, while US warehouses are seeing withdrawals "and there's [also] some tightening in the forward curve [of physical silver prices] at a time when there is less readily available stocks given higher financing costs and soaring freight rates" – thanks in part to the Iran-backed Houthis' attacks on shipping through the Red Sea.

 

Gold prices in China – the precious metal's No.1 mining, importing, consumer and central-bank buying nation – today steadied at ¥478 per gram, down 1.0% from last week's fresh record China gold price high as the Yuan paused its fall back towards last autumn's 16-year lows to the US Dollar. 

 

The cost to borrow Yuan in Hong Kong leapt overnight to 2-year highs, signalling a cash shortage perhaps due to the Chinese authorities urging commercial banks to stop selling Yuan so heavily as foreign investors pull money out of the world's 2nd largest economy.

 

China's stock markets meantime rose Tuesday for only the 5th session in 15 so far in 2024, with the CSI300 index rallying only 0.4% from yesterday's fresh 5-year low.