Gold Up Over U.S. Stimulus Progress, Silver Frenzy Recedes By

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By Gina Lee – Gold was up on Wednesday morning in Asia, amid growing hopes of further U.S. stimulus measures.

were up 0.41% at $1,840.95 by 12:39 AM ET (5:39 AM GMT).

Democrat lawmakers in the U.S. Senate on a fiscal 2021 budget resolution with COVID-19 aid spending instructions. This is a first step towards passing the $1.9 trillion stimulus package proposed by President Joe Biden, and an indication that the Democrat-majority chamber will advance the bill without Republican support.

Meanwhile, silver prices were rebounding from its over 8% fall during the previous session. Although the drop prompted an investor buy-in, a social media-driven rally that started during the previous week seems to have fizzled.

Prices climbed to $30.03 on Monday, their highest point since February 2013, after investors responding to calls on Reddit’s WallStreetBets forum flooded the market in a move not unlike the GameStop (NYSE:) squeeze in shares.

“The [retail] frenzy is dead, it’s rolled over. It’s fundamental driven today as there is a consistent demand for silver in the underlying primarily because of the green energy demand which is going to be using a lot of silver,” Axi chief global market strategist Stephen Innes told Reuters.

The white metal’s drop during the previous session came after CME Group Inc. (NASDAQ:) raised maintenance margins on by 17.9% on Monday, in order to reduce market volatility.

“[CME’s intervention] is allowing the markets to breathe a lot easier because that fear of retail flash mobs has diminished quite greatly,” said Axi’s Innes.

The silver frenzy that started during the previous week led to a supplier scramble for bars and coins and the amount of silver traded in the London market surged to 1.006 billion ounces on Monday. Although the frenzy has cooled down, with posts on Reddit encouraging traders to steer clear of silver, some investors expect a bit of volatility to remain.

“I don’t think we should write them off just yet and underestimate the collective power of many retail investors … the gold-silver ratio is currently below normal, and we can see this to continue converging back,” OCBC Bank economist Howie Lee told Reuters.

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