During the first six weeks of 2016, gold was the market’s rock star. The yellow metal rose more than 20% from its lows, hitting a 1-year high.
Such a surge was caused by the weakening U.S. dollar, a selloff in oil prices and yet another in global stock markets. Over that period, gold significantly outperformed silver thanks to its safe-haven appeal.
But since mid-February there were some factors that made silver outshine gold.
Oil Price and Base Metals Rebound
Oil prices made a nice comeback over the past five weeks. This recovery in oil prices gave some relief to market participants who were worried by their continuous fall.
These developments also helped push industrial metals prices higher. Unlike gold, silver has industrial applications, so the recent strength in the base metal complex helped silver outperform gold over the past few weeks.
Stock Markets Recover (For Now)
Thanks, in part, to healthier oil prices, global markets have been gaining since mid-February. That allowed money to rotate out of safe-haven assets like gold and bonds. Silver was less impacted than gold in this way, also causing silver to outperform it.
Will Silver Continue to Gain Against Gold?
That will likely depend on how far can the recent rally in the base metal complex and stock markets extends. However, both markets seem prone to a pull back which will likely cause silver prices to come down.
Also, buyers should watch the dollar’s movements. A stronger dollar would hurt both precious metals.