The silver market is seeing some strength again today in early trade as the bulls have taken prices above the $17 per ounce level. Stocks, crude oil and gold are all also higher today while the dollar index gains ground as well.
While gold is seeing limited upside thus far today after being lower earlier in the session, the bulls appear to remain content buying the dips. Silver, on the other hand, is seeing some decent ongoing strength following recent significant upside.
The silver market appears to be in the early stages of a potentially significant upside breakout and a long-term bottom may now possibly be in place. Silver appears to be attracting more attention with its recent strength, and bandwagon buying could drive silver sharply higher in a short amount of time. In addition, there may be remaining shorts in the silver market that are choosing to cover, also possibly fueling silver’s upside.
While the dollar index is moderately higher this morning, the greenback remains under some pressure and a form downtrend is in place. The dollar is getting precariously close to a major technical level, and a breach below this level could potentially see a significant leg lower in the dollar. Further weakness in the greenback may potentially boost silver and gold further and could be one of the primary catalysts for a significant rally.
Investors are likely awaiting further clarity from the Fed regarding the pace and timing of further interest rate hikes. Many believe that the pace of additional hikes will be slower than originally anticipated and without a clearer path to higher rates the dollar may continue to see ongoing weakness.
While silver is rising along with equities today, the silver market could potentially see further buying interest on an equity market breakdown. Chinese markets were sharply lower last night, although they closed well off the session lows. A return to extreme volatility in Chinese stocks could, however, drive risk aversion and selling in global equity markets and could potentially motivate investors to look for alternatives.
On the other hand, some of the fears over Chinese demand for commodities have abated in recent weeks, and strong demand from the world’s second largest economy could also potentially support silver and other precious metals.
The bulls appear to be in firm technical control at this point, and any dips in silver may be bought until proven otherwise.