Supply concerns drive Silver prices higher – Commerzbank

Even more than the Gold market, the real momentum continues to be seen in other precious metals markets, most recently, particularly in Silver, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen reports.

Silver remains priced cheaper than Gold

"After Silver prices surged to a new record high of just over $53 per ounce — a gain of up to 120% since the beginning of the year — a correction began early this morning. The sharp price increase over the past few days has also been driven by supply concerns, as seen in other metal markets."

"Reports indicate that physical metal demand from India has recently picked up significantly, fueling fears of supply bottlenecks, particularly in the London market. For example, lease rates (the cost of borrowing Silver), which have made an unprecedented jump, point to liquidity issues in that market. Meanwhile, declining inventories at COMEX since the beginning of the month may also indicate outflows toward London."

"However, the correction in prices this morning shows that the market had overheated. If the Gold price rally continues, however, Silver prices are likely to remain well-supported. Investors seeking more affordable alternatives due to the high price of Gold will continue to turn their attention to Silver, which, despite its rally, remains priced cheaper than Gold."