Silver prices are under some moderate pressure this morning as stronger stocks and a sharply higher dollar index take their toll. The metal may not fall too far, however, as geopolitical concerns remain on investors’ minds.
The situation in Ukraine continues to unfold. In the news today is the fact that Russian President Vladimir Putin has ordered military exercises to take place near the Ukraine border. This combat readiness test could potentially be a sign of escalating tensions and potential violence in the region. While most Ukrainians appear not to be overly concerned about it at this point, it is certainly something that could potentially escalate quickly and will likely be closely monitored not only by the people of Ukraine but world markets as well. The financial future of the country is at great risk currently, and world markets will want to see some type of advances towards a long term resolution very soon otherwise the situation could deteriorate further.
New home sales in the U.S. rose to a five year high according to data released this morning. All in all, the data being released recently continues to show an improving economy, although perhaps not at the pace that many had been hoping for. Janet Yellen will be speaking tomorrow before the Senate Banking Committee and investors will continue to pay close attention to her comments with regards to the economic outlook and the potential for additional tapering by the Fed. Many people feel that even though the data has gone through a bit of a rough patch recently, the Fed will likely continue its current pace of tapering its bond purchases.Gold and silver have been able to rally in light of this, which may be an indication of underlying market strength. Should the Fed decide at some point to taper the tapering, it could add a great deal of bullish sentiment to gold and silver and help propel the metals on another leg higher.
Silver remains in a solid uptrend on the daily chart, however, the price action today is slightly alarming. The market is close to taking out last week’s lows, which could invite further selling in the metal. In addition, the metal has thus far not been able to take out the $22 level on the upside after several days of trying. It is too early to tell if this is simply a needed pullback or the start of a trend reversal. On further downside, the market may be able to hold the $20.50 level which was the upside breakout point. The next few days will be very telling, as we see which way the silver market decides to go. A breach above the $22 level on the upside is key for the bulls now.