Despite pressure from a better-than-expected US jobs report, silver was able to snap a four-week losing streak last Friday, closing at exactly $29 on the New York spot market. Still, as equity markets rally and investors wallow in the gains and flock to risk, silver continues to lack momentum, languishing within a tight range.
This week's price performance was yet another case in point. Silver lost one penny on Monday, falling to $28.99. The next day, the metal was able to hold onto $0.16, allowing for a close of $29.15. Since then, silver has fallen back into a rut, posting small daily losses. None of the metal's closes in either direction have amounted to a quarter.
Futures market participants have drastically slashed their bullish bets on the metal. The 47-percent decline represents the biggest slump since June, reported Bloomberg.
BNP Paribas (EPA:BNP) cut its 2013 price forecast for the metal by $2.75. The firm now expects silver to average $31.35 this year and $28.45 in 2014. The firm's precious metals strategist, Anne-Laure Tremblay, said the divergence between gold and silver is surprising and warned that change could lie ahead.
This divergence can be seen in the physical metal markets. As gold ETF investors unload their holdings, they are reinvesting a portion of those funds into other precious metals ETFs, according to Commerzbank. Silver in particular has benefited from this trend, the firm said, but added that silver is not profiting from the inflows.
Meanwhile, industrial demand for silver is expected to soar to a new record level, according to Michael DiRienzo, executive director of the Silver Institute.
Speaking at the annual PDAC convention last week, he said industry's widening use of the precious metal is expected to average over 483 million ounces from 2012 to 2014, which is 53 percent greater than the 313.4 million ounces that industrial fabrication demand averaged from 1992 to 2001.
Thursday, May silver on the COMEX ended floor trading near the session high, at $28.80, which still represents losses of $0.15. The metal's closing New York spot price was $28.81, down $0.11.
Fresnillo (LSE:FRES,OTC Pink:FNLPF), the world's largest primary silver producer, reported record gold production and higher gold prices last year, but said its silver production fell 2.1 percent, to 40.9 million ounces. Moreover, in 2012, Fresnillo's profit dropped 19 percent, from over $1 billion to $845 million.