Silver prices are slightly lower today in what will likely be very light pre-holiday trade. Silver and gold are both weaker this morning while stocks, crude oil and the dollar index are all moving higher.
This week has seen a general lack of market-moving news although the silver market has moved well off the weekly lows. The overall technical picture at this point remains bearish and chart trading may dominate price action until more fundamental news is released.
The crude oil market remains a center of attention as lower oil prices have been causing a great deal of investor anxiety. Crude has shown some signs of stabilizing in recent days, although it remains way too soon to determine if any type of bottom has been reached. For now, investors seem to feel relief any day that oil is not deeply in the red. Unfortunately for the oil bulls; the market could very well roll over again and there is still a great deal of talk about oil going as low as $20 per barrel before finding a long-term bottom.
The weakness in oil is not doing silver and other commodities any favors. As long as oil remains firmly on the defensive, silver and gold may have a tough time putting together any type of sustainable rally.
While there has been talk of another leg lower in silver prices before some type of bottom is found, the price action seen this week could be construed as constructive. Silver got as low as $13.62 per ounce but has bounced from that level. The question now becomes: Can the silver bulls put together a rally that will drive more shorts out and attract fresh buyers?
That question may not be answered until the New Year begins. Investors may, at this point, be content waiting for 2015 to come to a close and waiting until the first quarter of 2016 before making any adjustments.
Now that the first rate hike is out of the way, investors will likely turn their attention to stocks, the dollar and the Chinese economy. While stocks have rebounded again in recent days, it remains unclear if investors will drive equities back to previous highs or beyond. Talk of additional Chinese stimulus is driving some buying in stocks currently, but the effects of such a move could potentially be short-lived.
There are a number of “balls up in the air” for silver and gold right now and the markets may not tip their hand at this point until investors return from the holidays.