Gold prices, which have been rallying to record highs, settled above $2,000 for the first time overnight. Analysts say the safe-haven assets’ run will continue, with industrial metal silver set to outperform gold.
Spot gold prices have skyrocketed more than 32 percent so far this year and are on track for the best year since 1979. Silver prices have also followed suit, shooting up more than 30 percent this year to date. On Tuesday, gold was trading 1.45 percent higher, at $2,050, while silver added 2.12 percent to $26.58 per ounce.
The massive blasts in Beirut, Lebanon, which killed dozens and wounded thousands overnight, “probably (added) to the shine of Gold above $2020,” said Mizuho Bank in a note seen by CNBC.
Analysts say that as the world economy is set to bounce back, it will drive up industrial consumption and will lead to an increase in demand for silver, which has many industrial uses.
“Silver … has a much higher industrial component to it. So, much higher component of silver supply demand in industrial consumption. And in an environment where we see the global economy recovering, that’s another reason to buy silver,” Michael Hsueh, a commodities and foreign exchange strategist at Deutsche Bank, told CNBC. He said that he expects silver to outperform gold. Hsueh echoed analysts at Citi who also said in a note last month that the rebound in manufacturing activity is pushing silver prices higher compared to gold.
Generally, both precious metals are set to continue rallying, analysts say. According to a precious metals fund manager at Jupiter Asset Management, Ned Naylor-Leyland, “There is plenty of upside for both gold and silver, in our view and … for silver to continue to outshine even gold.”
He pointed to factors that are “tipping investors over the edge in their distrust of fiat currencies — especially the US dollar.” These include monetary easing and the spike in government spending on managing the coronavirus outbreak, he said.
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