Silver prices are trading higher today as the metal has once again reclaimed the $20 level. The question is-will silver prices be able to stage a rally that could potentially take silver out of its recent trading range? The mid-January high of $20.67 must be clearly taken out to the upside for the bulls to start getting really excited. In addition, a move in silver above this level could potentially trigger fund buying and the rally could then begin to gather a lot more steam.
This week is light data-wise compared to last week. Investors have still been deciding this week what to make of last week’s disappointing non-farm payrolls data. It appears that investors are not too concerned as the stock market has rallied sharply over the last few trading days. This would clearly seem to be due to the notion that the Fed may have to pullback a bit on its tapering plans. Interestingly enough, new Fed Chairwoman Janet Yellen spoke this week and essentially stuck to the same script as her predecessor Ben Bernanke.
The Fed does not appear to be overly concerned about the recent rough patch in data, and it seems as if they will stick to their plan of tapering further next month. Of course, this could change between now and then but it does not appear likely. Precious metals have been moving higher based on the notion that the Fed may have to hold off on further tapering, but it would also seem that gold and silver are moving higher regardless. In fact, many feel that gold and silver will move higher even if the Fed does continue to taper.
This could prove to be a case of the markets getting overly bearish on precious metals. Even with all of the recent downgraded outlooks in precious metals by various banks, the metals have been trending higher. Gold broke above some key resistance yesterday-will silver now follow?
Investors will continue to monitor the data stream and the emerging markets currencies very closely. Any signs of additional strain in emerging markets could potentially boost the bid in silver prices. As far as equities go, although stocks have regained a lot of lost ground in just a few days, the market still looks a bit anxious. Should weakness come back into the stock market it could also potentially drive silver higher.
Janet Yellen is also seen as being bullish for precious metals as it is likely that the Fed’s monetary policy will not substantially change anytime soon. The key for silver now is having the bulls take out overhead resistance. If that happens, silver could potentially move much higher in short order.