Silver prices are slightly higher today as stocks move sharply higher, crude oil rallies and the dollar trades slightly weaker.
After trading lower earlier in the session, both silver and gold appear to be seeing some bargain buying. After poking the $16 per ounce level late last week, silver prices backed off and retreated to just under $15.20 per ounce. Such a pullback really comes as no surprise as the silver market had seen very strong gains in the last two weeks.
The question now is, will the silver bulls step in and buy any dips and will the rally seen in recent trade continue. Early indications are that dips are being bought and silver could potentially head back to test last week’s highs. A clean break above the $16 per ounce level could fuel further fresh buying as well as short covering. From a technical standpoint, such a move could potentially set the stage for a significant run higher in price.
Crude oil is likely garnering a lot of investor attention today as the black gold has recently reclaimed the $30 per barrel level and is now trying to distance itself from this level. The rally seen in recent trade could potentially drive speculation about whether or not a bottom has been reached in oil. With so many fundamental factors working against it, this could simply be another rally that fails. On the other hand, any coordinated production cuts could potentially fuel fresh buying in crude along with driving a significant short squeeze. Higher crude oil prices could potentially be bullish for the raw commodity sector including silver and gold.
Stocks are sharply higher today which may be detracting from risk aversion buying in precious metals. While stocks may have been due for a bounce, it would seem that once again equity investors are taking their cues from the crude oil market. Stronger crude oil equals stronger stocks, weaker crude oil equals weaker stocks — for now anyways. Whether or not stocks can maintain recent momentum remains to be seen, however. The SP500 has today, however, come out of correction territory on an intraday basis. There is a lot of day to go though and investors may still be cautious about holding longs.
With a dovish sounding Fed and ongoing risk aversion, silver appears poised for additional upside. Dips in silver may be bought until proven otherwise. The $16 level
could be key for further gains as a break above may fuel another round of buying while failure at this level could drive profit taking and a new round of selling.