Silver prices are trading slightly lower this morning in light holiday trade. Many traders and investors are already on Christmas vacation, and it is quite possible that volumes will now remain quite low until the new year. While it is difficult to say what the new year may hold for silver and the precious metals complex, silver has shown some signs of a potential bottom in recent weeks and may also potentially benefit from investors looking to reallocate assets at the beginning of the new year.
The stock market will likely remain the primary influence on silver and precious metals. Interestingly, stocks were moving decisively lower just last week before staging an almost unbelievable rebound. In fact, the SP500 climbed nearly 100 handles in just two trading days and has really not looked back since. It seems that more new all time highs are in store, and as stocks climb interest in the metals complex may remain somewhat dull. While this can change quickly, stocks appear to be poised for another leg higher at this point and there is no telling when or where the rally may conclude.
The dollar will also likely continue to play a role in silver as the greenback continues to move higher. The dollar is at multi-year highs and looks poised for further upside as well. This dollar strength may act as resistance to higher silver and metals prices for the foreseeable future.
Recent better than expected data is supporting stocks and the dollar. GDP came in showing the strongest surge in a decade. Weekly jobless claims today showed a drop to seven week lows. All in all, US data has continued to show improvement which will support the monetary policy hawks and likely keep bids in stocks and the buck. Economic strength can, however, work in silver’s favor. Unlike gold, silver is widely used in industry and any growth seen in the economy may boost demand for the metal and thus potentially boost prices as well.
Silver has shown some signs of life recently and had been on a slight uptrend until last week. Increased volumes around the recent lows could potentially be indicative of a market bottom, however, the bulls have a lot to prove at this point. Silver also completed a bearish technical pattern and demand for the physical metal has remained strong. These could be potential clues that silver has better days and higher prices ahead. Investors appear to see value in silver at current price levels, and this investment demand may keep a floor under prices for the time being.