Silver Technical Analysis
The silver market has rallied slightly during the early part of the day as interest rates in America have drifted a little bit sideways to lower. We are starting to see them tick up a little bit as we head toward New York, though, so keep an eye on that.
It is worth noting that the $60 level has offered a little bit of support. It is a large, round, psychologically important figure and the top of an area that has been important a couple of times as support, so we will see whether or not this holds. A little bit of short covering could be going on as well because silver is such a volatile market. It is difficult to go into the weekend with a massive amount of position size on, so there could be a little bit of that.
Declining Rates Could Provide Relief
The $62.50 level recently has been a bit of a barrier, so that might be worth paying attention to as well. I do see the potential for demand all the way down to the $55 level, all things being equal.
Keep in mind, though, that headlines surrounding energy being threatened can drive up interest rates as energy inflation becomes a concern. Then we have to worry about the fact that silver is a non-yielding asset. It becomes easier to own bonds, etc. However, if those yields start to fall quickly, silver could take advantage of that if historical correlations return to this market.
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