After posting solid gains during yesterday’s session, the silver market is sharply lower this morning and is thus far giving back the majority of yesterday’s gains. Prior to yesterday, silver prices had been retreating a bit after testing and failing at their 200 day EMA at the $25 level. This is not unusual for a market to fail at the first test of this critical moving average, however should the downside in prices accelerate it could shake out a lot of weak longs.
Silver, and gold for that matter, are seeing some see- saw price action as the precious metals are torn between the prospects of a U.S. strike against Syria and the Fed removing stimulus. With regards to Syria, investors will continue to monitor the situation very closely. President Obama is seeking Congressional approval before ordering strikes against the nation, and has gotten support from some opposition lawmakers already. Whether or not he gets approval remains to be seen, and markets will likely react strongly to any news released regarding this matter. As of this post, oil is sharply lower in addition to the precious metals, and perhaps the sense of urgency surrounding the situation is abating a bit.
The other thing tugging at silver prices right now is the fact that the U.S. economy continues to show signs of improvement. In fact, global economies are showing some signs of strength and this could further the case for Fed tapering. Over the weekend, PMI data for China and the EU showed improvement. China is obviously a huge piece of the puzzle when it comes to the global economy, but signs that the Euro zone is stabilizing are also welcome by markets as the EU has been a bit of a drag on global growth.
There is a fair amount of data set for release here in the U.S. during this holiday shortened week. Today, markets will see the beige book data, while tomorrow holds factory orders, weekly jobless claims, and ISM non-manufacturing in store. Friday will be the key monthly employment report for August. Consensus estimates are for 175,000 jobs added and an unemployment rate of 7.4%. This report will likely make the decision if the Fed tapers in September. The majority of economists are now expecting the Fed to begin removing stimulus at its September meeting. This can clearly have a huge impact on silver prices.
We do suspect that silver prices will not fall too far until there is more clarity regarding any action to be taken in Syria. We see support at the $23 level which also coincides with the 20 day EMA and we see resistance at the 200 day EMA at the $25 level.
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.