Silver prices are trading moderately higher this morning as weaker stocks and a weaker dollar give the precious metals complex a little boost. In addition, short covering and some bargain buyers are also giving silver prices a lift early on. Asa of this post, the markets have gotten the latest reading on durable goods orders and are now awaiting the latest data on new home sales. While durable goods orders for August beat expectations, the numbers for July were revised down sharply.
The new home sales data being released shortly will likely be closely scrutinized as worries have surfaced about the housing market’s ability to absorb rising borrowing costs. Interest rates have dropped recently however, as the Fed did not taper at last week’s meeting. The general consensus however, is that tapering is inevitable and that we could see it next month or by year’s end. Thus, interest rates are likely to continue to rise-and may rise regardless of whether the Fed tapers or not.
Silver prices have not done much at all this week in terms of price movement. This period of consolidation however, is not at all unexpected. With the Fed throwing investors for a loop by not tapering, the precious metals appear to be in “No man’s land” for the time being until they have some further inputs. Clearly, investors will be watching the data stream very closely for clues about the timing of action by the Fed.
Last week’s Fed announcement discussed some weakness in the economy being the reason that tapering has been held off. Should the data stream show some significant signs of weakness, it could lead investors to believe that tapering may be further down the road than originally thought. This could give the metals complex a much needed boost. In addition, stocks have been struggling recently following the post-Fed surge we saw in the indices. Should the current correction prove to be more than just a minor pullback, gold and silver could benefit as the flight to safety bid returns to markets.
Tomorrow, markets will digest the latest readings on GDP and weekly jobless claims. While these could be market movers, we still expect silver to stay in consolidation mode for the time being. The trend on the daily charts does in fact remain lower, and perhaps we will see silver prices re-test their upside breakout level of $20.63ish in the near future. On the upside, $22.16-$22.34 will act as near term resistance due to the fact that multiple key moving averages are in that area.
This market update is provided weekly with analysis. You can always check current market value of silver of silver by watching our on-site charts.