Gold and silver prices were recovering Monday after a painful selloff last week as the U.S. dollar weakened and bargain hunters stepped in.
Gold for June delivery was adding $15.70 to $1,507.30 U.S. at the Comex division of the New York Mercantile Exchange after falling 4.8% in a week. The gold price Monday has traded as high as $1,510.70 U.S. and as low as $1,489 U.S. The spot gold price was rising $12.30, according to Kitco's gold index.
Silver prices were adding $1.75 to $37.04 U.S. an ounce after plummeting 27% last week.
The consensus seems to be that silver has more downside now than gold. Barclays Capital thinks that silver will find support in the low $30s as "retail demand" takes the lead but that "longer-term investor interest in gold remains robust." Barclays cites Asian demand as a key factor for higher gold prices.
Goldman Sachs seems to be in agreement issuing a 12-month silver price target of $28.20 U.S. with silver slipping as low as $24.70 U.S. in the next three months, while gold's one-year target is $1,690 U.S. an ounce after falling to a three-month low of $1,480 U.S.
One expert thinks the ratio could move even higher, as much as 50:1 but that long term he is sticking by his ratio of 16:1.
The Commodity Futures Trading Commission's bank participation report for May shows that gold long positions fell 7% as of May 1 compared to April 1, but short positions stayed relatively the same, whereas silver's long position rose 25% and short positions fell 18%.
Gold and silver were breathing a sigh of relief Monday as the U.S. dollar index fell. The currency rallied more than 3% last week as the euro tanked on rumors that Greece might leave the European Union and on speculation that the European Central Bank won't raise rates at its July meeting, which had been widely expected. The lack of consistent and aggressive rate hikes will leave negative real interest rates in the E.U. for longer than anticipated, now at a negative 1.55%.
