Silver prices are lower this morning as it appears that lawmakers could be getting closer to an agreement that would end the partial U.S. Government shutdown. While no real action has yet been taken, some of the tone we are hearing appears to be a little more positive. The shutdown is now in its 9th day, and while investors have not yet begun to panic, every day that goes by we get closer to that point at which panic does set in and we see it in world markets.
The big news from overnight was President Obama nominating Federal Reserve Vice-Chair Janet Yellen for the top post at the Fed. This has been discussed for some time now and is by no means a shocker. The significance of this nomination however, is the fact that Yellen is considered to be very dovish and will likely continue in Bernanke’s footsteps with loose monetary policy. Quantitative easing could be here for longer than many had expected, and that could certainly be considered bullish for the precious metals complex.
Traders will be closely watching the FOMC minutes due for release later this afternoon. Investors will be once again looking for any clues the Fed may give about the timing and extent of any tapering in regards to its bond buying program. Investors were caught off-guard at the last meeting when the Fed elected not to taper citing labor market weakness and ongoing concerns about the strength of the economy.
Certainly the issue of tapering is very important to investors right now, and it seems that perhaps the Fed has backed itself into a corner. After rallying following the no taper at the last meeting, markets have come under pressure and no one knows just how they will react once the actual tapering does begin. Hopefully, the minutes today will shed some light on the subject.
Silver prices began the week on a strong note breaking above the key 9,20, and 50 day EMA’s. Thus far however, the silver bulls have struggled extending prices any further to the upside. In fact, as of this post the market is now back below those key moving averages and is trading at just under $22 per ounce.
This could quite possibly be some position squaring ahead of the FOMC minutes today however, the fact that silver could not push further earlier in the week is a bit of a concern for the bulls. The key levels we will be watching in this market are this week’s highs around $22.525 and this week’s lows around $21.65. Whichever ever area is penetrated first will likely determine the near term market direction.
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