Silver prices are a bit higher today as a weaker U.S. dollar index and also lower stocks today are likely adding to buying interest. Silver has been creeping up throughout the day session today in a very subdued session. There is not much to speak of today in terms of economic data, although the market will see the latest reading on Q1 GDP tomorrow, as well as weekly jobless claims data. On Friday, the markets will get the latest readings on Chicago PMI and consumer sentiment.
It is quite likely at this point that many market participants are now simply in a holding pattern in anticipation of next week’s non-farm payrolls data. There has been so much focus on the FOMC minutes and Fed rhetoric lately, it only makes sense that investors will very closely scrutinize this report to try to determine the likely timeline for Fed tightening. This report will probably provide the single biggest clue.
In terms of outside markets, silver will likely continue to take its cues from the U.S. dollar index and the stock market. Stocks have experienced a little more difficulty the last few sessions, with volatility picking up a bit. Could this be the top for the market? Difficult to say-certainly possible but not likely.
The trend remains up until proven otherwise, and it seems that the Sp’s want to print 1700. This continued interest in stocks will likely keep a damper on precious metals for the time being. The U.S. dollar index has traded more sideways the last few sessions. This market could possibly be putting in a top-but its too early to tell. Just as with the stock market, the trend remains up until proven otherwise. Should the dollar index continue its ascent, silver will face one more key obstacle.
From a technical standpoint, silver has been trading in smaller and smaller ranges.This almost seems as if prices are “coiling” and getting ready to explode in a breakout. Thus far, the market has not been able to maintain trade above the 9 day exponential moving average (EMA). On the flip side, the market has also not been able to take out the recent swing low.
There are quite likely a large amount of shorts still in the market, and should silver prices begin to get some momentum going to the upside, a very powerful short covering rally could take place. Such a rally could quite possibly take silver prices back to the $25 area very quickly. For now, last week’s lows around $21.92 are key on the downside while the yesterday’s highs around $22.71 are key on the upside. Whichever level is breached first will likely determine the near term direction of price.
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