Silver prices are slightly lower this morning in quiet trade. Stocks, crude oil and the dollar index are all also lower, as well. Market action may be limited today as most of the Government and banks are closed today in observance of the Veteran’s Day Holiday.
The silver market is simply trying to find some solid footing at this point following heavy selling in recent sessions. Silver prices have declined from over $16 per ounce to current levels around $14.30 per ounce in just the last several sessions. Although the market may be oversold on a short-term basis, the silver bears may continue to drive prices lower and look to take out the August lows around $14 per ounce.
A breach below the recent lows could potentially ignite further selling in the metal, and a fresh leg lower in price could possibly be in store.
The next several weeks could potentially see relatively range-bound price action in silver and precious metals as investors await an official lift-off from the Fed, which is now expected to come next month.
This week is relatively light from a data standpoint, and investors will have a few things to chew on the rest of the trading week. Tomorrow, markets will get the latest data on weekly jobless claims, as well as commentary from several Fed officials. Friday will bring the latest readings on PPI, Retail Sales and Consumer Sentiment.
In addition to domestic data, investors will likely continue to closely monitor any developments coming out of China.
It appears that the commodity sector could be headed for another run lower. As far as the silver goes, things may get worse before they get better. Although silver is getting closer to production cost and production has already been declining, another move lower may be seen before the market finds a long-term bottom.
Stocks have recovered from heavy losses and volatility seen in late summer. As long as equities remain on the stronger side, silver and gold may have a tough time garnering significant buying interest.
That being said, once the Fed does raise rates it could potentially send stocks into a tailspin. Lower stocks could potentially halt the current slide in silver as investors may seek out alternatives assets to put cash to work in.
Silver may find firmer ground once the Fed does hike. Given the amount of stimulus still being pumped into other economies, the pace of any further hikes by the central bank is likely to be slow and incremental.