Silver is moving higher this morning along with gold as stocks, crude oil and the dollar are all moving lower. Silver prices have broken above the $16 per ounce level this morning in early trade and appear poised for further upside. The $16.50 level may be a potential target for the silver bulls in the coming sessions.
This morning, investors got the latest data on retail sales for September. The report showed retail sales up just .1 percent and revisions to prior data also added to the disappointment.
At a time when data is being closely scrutinized, this morning’s disappointing retail sales data, along with further weak data out of China, will likely add to ongoing debate about the potential timing of the Fed’s first interest rate hike.
Although the central bank has reiterated that it would raise interest rates before year’s end, that course of action has now come into question. Perhaps sealing the deal was last month’s jobs data. While a rate hike in 2015 is still a possibility, another weak non-farm payrolls report for October could potentially keep the Fed on hold until 2016 — perhaps well into 2016.
The notion of the central bank holding steady has fueled some fresh buying along with short covering in silver and gold. The $16.50 level in silver could potentially be a major test of the bulls’ resilience. If the market is able to break above this level, the silver market could potentially see a significant and rapid climb higher.
After seeing some severe volatility in recent months, stocks have been fighting back. While this comes as no surprise given the fact that interest rates may remain at zero for longer than anticipated, the rally may once again come into question. Should the equity markets begin to rollover once again, it could also fuel further buying in silver and precious metals as investors look for alternative asset classes to put capital to work in.
Silver is currently gaining technical momentum and appears to be breaking out of its recent trading range to the upside. Given the fact that demand for silver has remained strong and that the Fed may be on hold longer than expected, the market may have significant room to run to the upside.
The dollar index has continued to weaken on the notion of the central bank holding off on the first rate hike and this weakness may potentially fuel more buying in silver and precious metals. While the dollar has been in a trading range since May, a downside breakout of this trading range could potentially ignite an even larger rally in silver and precious metals. The buck is approaching the bottom of this range now and a downside breakout could potentially be seen in the coming sessions.