Silver prices are moving lower this morning in light trade as most investors are looking forward to new years eve celebrations tonight. As of this post, silver is trading lower by about $.44 per ounce.
This is a light week from both a data perspective and volume perspective. Markets have seen the latest data on Dallas Fed manufacturing, the Case-Shiller housing index and consumer confidence. This morning, weekly jobless claims data showed a sharp rise in claims of 17,000 to 298,000. It is worth noting, however, that data around this time of year can be a bit skewed. Chicago PMI slowed this month while pending home sales picked up. There will be no data released tomorrow as all markets are closed. Friday will finish off the data week with the release of the PMI and ISM manufacturing indexes as well as construction spending.
Stocks are essentially flat this morning while crude oil prices are moving lower. The dollar index is moving higher. Price action in many markets is quite flat with the exception of some year-end window dressing and position squaring.
Entering the new year, silver and the precious metals markets will likely continue to be driven by the same underlying factors that have kept pressure on the complex for some time. Stocks appear poised for another run higher, and there simply is no telling where the rally might run out of gas. While anything is possible, one can certainly make the argument for silver and precious metals to remain subdued if stocks continue their winning ways. That being said, it will be interesting to see if investors keep buying stock at the beginning of the year or if some reallocation beings to take place.
The dollar index also continues to weigh on silver and also appears poised for more upside. The greenback is rising on the notion of higher rates in the U.S., better economic data and weakness in the EU and Japan. While metals could potentially rally in spite of this dollar strength it may continue to act as a form of resistance to significantly higher silver prices.
Demand for physical silver has remained consistent and may help keep a floor under prices. The dips in silver have thus far been bought, but it remains to be seen if that trend will continue. The longer that metals prices stay range bound, the more likely it becomes that investors will start looking for lower prices to buy and thus we could potentially see another leg lower. Conversely, if silver is able to stage a meaningful upside rally, fresh buying interest may pick up as that could be another possible indication that the lows have potentially been seen.