Silver prices are a bit on the quiet side here today as as the metal holds above support at the $19 level. Appetite for risk in world markets remains elevated, and this is working against the precious metals bulls. Yesterday, gold prices broke through some key downside support in the $1280 area and dragged silver prices down as well. Although gold is looking somewhat stable today, the potential for additional downside in the yellow metal is very real, and should additional downside be seen it could very well be the last straw for silver and drive the metal on another leg lower.
Silver and gold both appear to be lacking any real bullish catalyst at the moment. World markets continue to move higher, and thus far there does not appear to be an end in sight to the rally in equities. The Russian/Ukraine situation has remained relatively quiet this week and does not appear to be on the verge of escalation at this point. Obviously, this can change quickly but for now investors continue to shrug it off and purchase risk assets. Unless this changes, or unless stocks begin to falter, the silver market may be headed for additional downside in the coming weeks.
Although crude oil has reclaimed the $100 per barrel mark and has apparently broken out to the upside, the dollar index has also stayed above the $80 level and this could potentially be weighing on silver prices. The divergence between the metals and oil is worth noting.
Recent economic data has been good-but not too good. This may be a bullish factor for stocks and a bearish factor for silver. The economy continues to grow, although perhaps at a slower pace than many thought. This may keep the fed more on hold with regards to interest rates and thus potentially continue to drive stocks in the process.
From a technical standpoint, silver prices are looking bearish on the daily charts. The silver market is currently flirting with its trading range bottom around the $19 level. A solid breakdown below this level could potentially send prices to the $18 level very quickly. Beyond this, silver could potentially challenge multi-year lows in the neighborhood of $15 per ounce.
For now, we shall see if the silver bulls can once again defend the $19 area. Unless there is some type of change, however, in the geopolitical landscape or if stocks continue to march higher, then the silver bulls will really have their work cut out for them.