Silver prices are moving lower today as stocks move higher, crude oil prices fall and the dollar index moves slightly higher.
Silver is showing some signs of weakness after stalling out at the recent highs near $16.20 per ounce. The recent rally from the $14.50 level looked promising, although the bulls have once again not been able to put together much follow through.
While recent sideways action in the silver market could potentially be consolidation ahead of more potential upside, today’s price action does not look too encouraging. In fact, a break below the recent lows around $15.375 could possibly trigger further profit taking and may even encourage the shorts.
Another possibility is that the market may remain stagnant ahead of next week’s FOMC meeting. Ongoing speculation about what the central bank may or may not do at next week’s meeting could keep the marketplace in ‘wait-and-see’ mode. Although many now appear to be of the opinion that the Fed will hold off until next year to raise interest rates, the possibility of a hike by the central bank next week needs to be considered.
Waiting on the Fed, as well as a general lack of news, may keep silver in a fairly tight range until next week. Stocks have been moving higher as shorts have been forced to cover. In addition, the lack of news has seen equities enter into a “slow melt up” on lower volume. As stocks move higher, demand for silver and other perceived safe haven assets could be dwindling.
Gold has also been pulling back following recent gains, and weakness in the yellow metal is likely not doing silver any favors.
Perhaps the biggest driver of precious metals right now, the dollar index has also been moving higher. After a move to previous swing lows, the dollar appears to have found support once again. While a breakdown below these key lows could potentially ignite a further rally in silver and the precious meals complex, continued movement higher in the greenback could also potentially cause longs to exit positions. The dollar may trade sideways going into next week’s FOMC meeting. A hawkish-sounding Fed could send the currency higher once again while a dovish-sounding Fed could potentially drive the dollar back to recent lows or even beyond.
In other outside market action, crude oil is once again on the defensive and is approaching the bottom of its recent trading range. A break below could see oil heading back for another test of the $40 per barrel level and could potentially weigh on silver and other metals.