Silver continues to come under selling pressure as the US economy is gearing up for a p period of expansion. The market will focus upon the potential for an interest rate rise in the coming quarter as improved domestic conditions fuel the case for normalisation. Any move by the FOMC to raise rates and start to normalise their monetary policy could see the US Dollar appreciate strongly, thereby negatively impacting the price of Silver. The risk of a rate rise is real and subsequently our long term forecast places the commodity around the $14/ounce level.
Silver Demand Buoyant
As the inexorable demand for smart phones and digital devices grow, so does the need for increased levels of Silver. The demand for industrial Silver has soared throughout 2015 with recent forecasts predicting the demand for the commodity to grow by 27% through 2018. As a key component of smart phones, consumer demand for the devices is expected to expand the industrial need for the metal to over 142 million ounces by 2018. This is a positive development, however it still faces a resurgent US economy, which is likely to overpower any change to growth on the demand side in the near term.
Technical Analysis
Volatility has remained subdued in the silver markets with the precious metal remaining within the channel. The support at $15.27 and the resistance at $17.74 look to be holding firm and will provide traders with opportunities to take advantage of the range when the price is close to these levels. We will be looking for a close either side of the range to provide an excellent opportunity to play a breakout strategy, but until then, the range will continue to dominate.
