No doubt every trader in the market at this week's start noticed
the sudden surge in commodity prices. Precious metals like
in particular have gained an exorbitant amount over the past month.
But are their price movements on par with one another?
Looking at the fundamental side, the tensions spreading across
the Middle East and North Africa
have indeed carried a high impact on commodity prices; Gold and
especially. Oil's price rise appears in line with the safe-haven
Gold, but fundamental factors affecting the speculation of oil
supply disruptions are more likely behind Crude's latest price
moves and may be more sharply affected by developments in the
and Silver, on the other hand, are affected not only by risk
flight, but also technical speculation, as well as industrial
demand, in the case of Silver.
The difference between these latter two is particularly
interesting for traders. Whereas Gold has a large market of buyers
and sellers, the Silver market is relatively thin, leading to
higher volatility in silver trading.
Gold's rising price was fueled by a large market of technical
buyers who have been purchasing on dips following the break past
$1340 per troy ounce. Silver, however, has breached its 30-year
high price level, meaning there is little technical data a trader
can base his/her trades on from reviewing the charts.
The lack of historical resistance lines above where Silver
currently trades, as well as the thin market of Silver traders,
means Silver prices possesses an above-average tendency to become
overextended. Silver is also tied with electrical component
industries as well as solar panel producers, which have seen rising
profits over the past few years on recent hi-tech surges and energy
Gold prices are approaching the strong historical resistance
level of $1420 an ounce, but Silver has no such historical line in
sight. Analysts are using this information to anticipate a bullish
run in Silver prices over the next week or two, whereas
Gold may find resistance
relatively soon and dip back down towards the $1340 price