Silver prices are moving moderately higher this morning as stock futures are weaker and the dollar index is softer as well.
Asian investors are returning to work following the Lunar New Year today, and this could be a factor in both higher silver and gold this morning. Physical demand for silver seems to be picking up a bit at current levels as well, and this demand may help keep a floor under silver prices.
Speaking of China, the country last night reported a reading of 50.1 on its flash purchasing managers’ index. A reading above the 50 level is seen as positive, and this reading was the highest seen in several months. As a huge consumer of commodities, any positive data from China has the potential to boost commodities in general.
Janet Yellen’s testimony before the Senate Banking Committee yesterday is still being deciphered by investors. While there wasn’t any commentary of significant difference, her comments do appear to lean more toward the hawkish side of the fence. Ms. Yellen reiterated that the central bank will look at policy from meeting to meeting, and the Fed does not want to put itself into a corner.
Stocks have broken into fresh all time high territory and appear headed for more upside. The recent extension of the Greek bailout deal is likely fueling risk appetite, and the Fed’s ongoing patience with regards to higher rates is also likely having an impact. One has to wonder, however, how much stocks may have left in the tank. While investor anxiety over Greece may have subsided for now, it is quite possible that we see the same tensions return to the marketplace in four months time as the bailout extension approaches expiration. Unless significant progress is seen between Greece and the EU in the meantime, this could potentially be an issue that sends a large ripple effect through global financial markets.
The rest of the trading week, investors will get the latest data on weekly jobless claims, new home sales data, CPI, durable goods orders, GDP and more. This data will be very important as the Fed will be watching the numbers closely and better than expected data could be indicative of the Fed raising rates sooner as opposed to later.
While the silver bears are in firm control, the bulls are showing signs of life today. Near term support may be seen at the $16 level while near term resistance may be seen around the $16.59 level.