LIVE MARKETS-"Stay alert": Silver rally sparks correction talk

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

"STAY ALERT": SILVER RALLY SPARKS CORRECTION TALK

Silver's XAG= relentless climb is raising eyebrows, with Giuseppe Sersale, fund manager and strategist at Anthilia in Milan, noting the metal is now "spectacularly overbought."

"A serious correction has to be expected in the not-too-distant future," he cautions.

He points to a study by Subutrade.com highlighting this is only the second time silver has posted such a streak - and the last time it did, it was followed by a sharp collapse.

Sersale also mentions Wall Street legend Bob Farrell's Rule No. 4: "Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways."

The Italian strategist however notes that gold's technicals remain constructive and believes silver is unlikely to start falling before gold hits $4,750, its first breakout target.

To conclude: "Gold, silver, platinum, palladium and gold miners are riding a wave of euphoria, in some cases unprecedented. For now, it's about staying alert rather than calling for a major correction... If gold's breakout falters, though, the narrative changes quickly."

At the current pace, another month of gains could push silver towards $100, an eye-catching level. Silver hit a record high of $72.7 on Wednesday and gold XAU= broke above $4,500.

(Danilo Masoni)

EARLIER ON LIVE MARKETS:

STOXX NEAR RECORD WITH TRADERS IN HOLIDAY MODE CLICK HERE

BEFORE THE BELL: FESTIVE TRADING, BUT M&A KEEPS GOING CLICK HERE