Silver prices are moving slightly higher in quiet trade here at the mid-week point. This has been a relatively subdued week thus far following the Easter Holiday, and many appear to be on spring break or vacation.
Although stocks are trading slightly lower here this morning, the equities markets have continued their winning ways of late and continue to look strong. Stocks may now be poised to stage another new leg higher into all-time-high territory. While there has been concerns voiced recently about corporate selling, a weakening Chinese economy, Euro zone deflation and of course the situation in Ukraine, investors appear to remain fairly hungry for risk and will quite possibly continue buying stocks until proven otherwise.
What does ongoing strength in equities mean for silver and gold? It is difficult to say-but certainly one could make the argument that higher stocks and strong risk assets could be potentially bearish for silver and precious metals.Time will tell, however this is something that precious metals investors will likely be watching closely.
The HSBC Manufacturing data out of China last night came in at a reading of 48.3 for April, which was a slight uptick from the March reading of 48. It is worth noting, however, that the gauge has now seen contraction for four months. A reading below 50 generally signals contraction. While the data was not terrible, it does point to a Chinese economy that is perhaps stabilizing rather than growing further or significantly slowing. As with some of the other recent warning signs, this will continue to be monitored by investors.
There have been reports of demand for precious metals picking up in recent weeks, however, demand at this point does not seem to be going through the roof. Silver prices appear to be quite comfortable in their current trading range, and who knows how long silver may stay range bound. Precious metals almost seem to be in a holding pattern of sorts-perhaps waiting for more action or inaction by the Fed. Gold prices are flirting with near term support currently, however, and a breakdown in the yellow metal could very well drag silver down with it. Silver is clearly trending lower on the daily charts, and it seems more and more likely that a test of the recent range bottom around the $19 level may be in store. This week’s highs around $19.705 will likely act as first resistance while the even $20 level may also prove to be a tough barrier.