Silver prices are slightly higher this morning trading just above the $16 per ounce level. Stocks and crude oil are also higher while the dollar index is moving slightly lower.
Silver prices have been contained within a fairly tight trading range over the last week and a half, and the market could stage a breakout — or breakdown — at any time now.
Of course, the precious metals complex may be waiting to see what further developments come out regarding Greece and what the FOMC meeting may bring.
This afternoon’s FOMC announcement and subsequent press conference will be closely watched by investors. While no changes in policy are expected today, markets will be looking for any solid clues as to the central bank’s intentions. Many analysts feel that September may bring the initial rate hike, while some have even suggested that the first hike could come as soon as next month. Still, other analysts believe the Fed will hold off until next year. This afternoon’s announcement and press conference could give a more concrete idea as to the Fed’s plans, and therefore could potentially have a significant impact on markets today.
While markets are awaiting further clarity on the outlook for interest rates, they are also paying attention to the ongoing negotiations between Greece, the IMF and the EU. Unfortunately, these talks do not appear to have yielded much thus far, and the clock is ticking. With the four month bailout extension set to run out at month’s end, there is little time left to reach a deal and put one into place before the money runs out. While global markets have thus largely shrugged off the notion of a Greek default, it is looking more and more like a default will be inevitable. Of course, things can change quickly, and if the country does default and a panic sets in, silver and other precious metals could potentially stand to benefit on safe-haven demand.
Silver has continued its larger trading range for some time now, and is not currently showing any real signs of wanting to do differently. Silver could potentially remain range bound for some time, as investors await more clarity on the potential for additional rate hikes and as they digest ongoing economic data. Some analysts believe that the economy remains too weak for further rate hikes, and that the central bank will be forced to keep rates low for some time.
As the bull market in stocks continues, the silver market is lacking a significant bullish catalyst. Until such a catalyst develops, the white metal may continue to see sideways price action.