Silver prices are once again under pressure this morning after seeing a slight bounce yesterday. Investor anxiety over U.S. airstrikes in Syria does not seem to be escalating. In fact, stocks are moving slightly higher this morning while oil is slightly lower and bonds are flat. MBA purchase applications as well as the latest data on new home sale will be released this morning.
The precious metals complex appears to be suffering from a lack of stronger physical demand at current price levels, as well as an ongoing bearish technical posture. The silver market has completed a large descending triangle that could potentially take silver prices to the $13 level in the coming months. While we would expect to see some relief rallies here and there, the overall picture for silver remains bearish. Perhaps silver’s saving grace will be its industrial uses-and perhaps as the economy continues to gather steam that production and therefore demand will pick up. In addition, both silver and gold appear to be oversold at current levels, and a short-covering relief rally is becoming more and more likely at some point.
While the metals markets always have the potential for reaction to headlines, investors have thus far been able to seemingly shrug off the current geopolitical landscape and risks. It would seem at this point that there would have to be some significant new headlines in order to rattle markets and put a dent in investor sentiment. For now, however, things have been a bit more quiet with the exception of the new airstrikes.
Many are again discussing the possibility of a top in equity markets. Stocks have shown some weakness recently, however it is likely far too early to call a top. This market has proven to be resilient and when it does in fact top, it will likely be a bit of a process. Silver and precious metals will likely remain on the defensive until equities have peaked. With stocks running higher and a stronger U.S. dollar index as well, investors seem content keeping their money at work in equities and some other risk assets. It is possible, however, that once investors do start to pull out we could potentially see a significant amount of buying take place in silver and the precious metals complex. In the meantime, however, it seems that investors are also comfortable taking a wait and see approach to silver. Some believe that the slide is not yet over, and buying opportunities at lower price levels will present themselves.