Silver prices are slightly higher in relatively quiet trade this morning as investors await the FOMC minutes due out this afternoon. Crude oil is also slightly lower and stocks appear to be mixed.
It appears that markets may have already entered the summer doldrums when it comes to trading. Obviously, things can change quickly but it seems as if many are content taking some time off right now and perhaps taking some chips off the table. In addition to this, the world has been a somewhat quieter place recently and markets have not really been moving on any headline news.
Silver has thus far this week only traded in about a $.40 range. Silver has been in a consolidation pattern going back to the end of June and for the moment appears quite comfortable at current price levels. We would not expect this consolidation period to last forever, however. At some point the metal will likely break up or break down-we just don’t know when and to what degree. For the time being, it would seem that the bulls have the technical advantage on their side but must extend prices to the upside to keep the momentum. Should silver prices start to falter, the market could potentially slide significantly and do so quickly as fresh longs bail. Near term resistance will likely be seen at last week’s high of $21.33, while near term support may be seen at the $20.80-$20.82 area.
The biggest data point of the week is this afternoon with the release of the FOMC minutes. Although nothing different of significance is expected, investors will likely pay close attention to the minutes looking for clues about when the Fed may begin hiking rates as well as the Fed’s assessment of economic conditions. These minutes certainly have the capability to move markets-the question is will they. In recent commentary, Fed Chairwoman Janet Yellen has reiterated the need for an accommodative Fed, and many feel that it is unlikely the Fed will begin tightening any time soon. This could potentially be seen as bullish for the precious metals complex.
Crude oil continues its downtrend after posting recent highs near the $108 per barrel level. Oil is approaching the $100 per barrel mark, and a break below could potentially send many more longs scrambling for the exits. Higher crude can be supportive for silver and precious metals-and this divergence is worth noting. Although silver has some bullish momentum right now, the market is still in need of additional bullish news or a catalyst to take prices through recent resistance. Perhaps a potential top in stocks will provide such a bullish catalyst. We shall see.