Silver prices are trading moderately lower this morning as stocks move higher to start a data rich trading day. Last night, outgoing Fed chief Ben Bernanke also gave a speech in which the chairman discussed ongoing monetary policy and why the Fed should remain very accommodating for the foreseeable future.
Markets today will have a lot to digest as investors will get the latest readings on the consumer price index, retail sales, existing home sales, and business inventories. In addition, the likely biggest attraction of the day for markets will be the release of the latest FOMC minutes early this afternoon as well as a speech by St. Louis Fed President James Bullard. Investors will be paying close attention to Bullard’s speech as well as the FOMC minutes looking for any clues on monetary policy. Although either one of these could move markets today, most feel that it is unlikely that anything new of any substance is released. It seems that the Fed is on course for tapering early next year at some point, and there likely will not be any deviation from that eventual course of action for the time being. Investors may however, be more interested today in hearing the Fed’s view on economic growth. Despite the last non-farm payrolls number blowing away expectations, the economy does continue to show some underlying weakness. This weakness has the potential to keep QE around for longer than many expect.
The dollar is moving lower this morning which at times can be supportive for silver prices. It does appear however, that markets are in a holding pattern ahead of the minutes release later today. Crude oil is once again trading lower, and oil’s continuing trend lower is likely weighing on silver prices as well.
There was an interesting report this morning by TD securities which discussed the open interest in Comex gold and silver futures options expiring in December. According to TD, in silver’s case, the majority of open interest is concentrated at the $23 strike price. Does this mean the market will make a move to $23 before expiration? Not likely given silver’s current technical status. Stranger things have happened however, and this is something that is worth noting.
The bears remain in full control on the daily silver chart. The market is trading well below its 9,20 and 50 day EMA’s which are all clearly sloping downward. The market once again finds itself testing the top of the previous trading range at the $20 area. This level may prove to be good support again however, should this level give way we could see silver at $19 very quickly. The market will only turn and start to move higher once the last bull has thrown in the towel. Because of this, a rush lower in silver to $18 or $19 also has the potential to be a decent buying point for the patient, long term investor.