Silver prices are moving higher this morning as some short covering, dollar weakness and bargain buying appears to be taking place. Silver continues to trade comfortably in its recent range of $19 to $20.50, and although the silver market could potentially spend a lot of time range bound, many feel that is unlikely. Silver does, however, continue to look unsure about what direction it may want to breakout in.
Silver prices moved higher on Monday to begin the trading week, and were relatively quiet yesterday. The silver bulls have thus far successfully defended the bottom of silver’s trading range, and therefore upside could potentially be in the cards. In addition, silver could be in the midst of forming a longer-term bottoming pattern and thus could potentially set the stage for an upside run in the coming weeks or months. Higher crude oil prices could potentially help boost precious metals prices while a stronger dollar and equity strength could potentially act as roadblocks for the metal bulls.
Of note today is news that the London silver fixing will be scrapped and the LBMA is already looking for viable alternatives. The silver fix will stop on August 14 of this year. LBMA will be asking for feedback from market participants in order to try and find a good alternative mechanism. The end of the silver fix comes as the gold fix has been facing increased scrutiny by market participants and regulators.
Today, the producer Price Index showed some signs of inflationary pressures building. The PPI data showed a jump of .6% compared to consensus estimates for an increase of .2%. This jump represents the largest gain in the reading since September 2012. Any signs of inflation would be welcomed with open arms by the precious metals markets, as inflation has lagged and remained below the Fed’s target. Tomorrow, markets will get the latest reading on the Consumer Price Index as well along with weekly jobless claims. Friday will see consumer sentiment data along with housing starts.
The silver market will likely continue to focus on the situation in Ukraine as well as global equity markets. It does still seem that silver and gold may have a tough time treading higher if stocks continue to rise. On the other hand, the metal bears have failed to take prices lower once again-and this could be a sign of underlying strength. The $20.50 level remains key on the upside for silver, and a breach above this level could spurt another round of fresh buying.