The silver market is holding around the $16 per ounce level as some safe-haven buying may limit downside. In addition, bargain hunters and short-covering are also featured.
Stocks are moving sharply higher today as there has been some reported progress in the ongoing negotiations between Greece and its creditors. Greece’s creditors have asked the country to step up its efforts in the negotiations, looking for additional cost cutting measures.
While markets are cheering this progress report, a deal is not yet in place-and time is running short. Without a deal before the end of the month, the country’s four month bailout extension will expire and the country could become insolvent. This could potentially cause markets to fall just as quickly-if not quicker-than they are rising today.
Crude oil is moving higher today as well, and is attempting to distance itself from the $60 per barrel level. Conversely, the dollar index is weaker on the day as the euro is slightly stronger. The dollar looks more and more like it has put in a potential top, and should additional weakness be seen it may benefit the precious metals complex.
It would seem that following some recent economic data, investors are feeling a bit better about the U.S. economy. Markets will continue to look forward to the upcoming FOMC meeting, in which the central bank may give more clues about a potential rate hike. A hike in September-or even July-remains a distinct possibility.
In other news, global bond markets have once again seen selling pressure and high volatility. The potential for inflationary pressures down the road may continue to weigh on bond markets, and higher volatility may be here to stay for the time being.
The silver market looks poised for further downside from a technical standpoint. If the bulls are able to hold around the $16 level, it would possibly become a higher swing low. On the other hand, the market’s lack of upside follow through has to be a concern for the silver bulls. This is the third significant dip seen in silver prices since March, and another attempt at the March lows could potentially see the beginning of a fresh leg lower. A deal between Greece and its creditors may only serve to increase selling pressure in silver as risk appetite may increase and perceived safe-haven assets such as silver and gold may be sold in favor of risk assets.
With a deal being reached, however, the dollar may also lose ground as its safe-haven appeal diminishes and dollar weakness may potentially help counteract lower silver prices.