Silver: A Return To $16

Silver was having a relatively quiet week, with the metal spending the majority of the time consolidating between $15.75 and $15.44. Soft Chinese economic data also had no noticeable impact in the Silver markets.

Volatility for Silver accelerated on Friday, when stronger than expected US Advance Retail Sales increased demand for the US Dollar and subsequently encouraged a sell-off in metals. However, investors closing Dollar positions later in the afternoon encouraged a reversal, with Silver concluding the week at its highest valuation in a fortnight ($16.29).

Looking ahead to next week, silver investors would be mindful to pay attention to the FOMC Minutes release on Wednesday. If the Dollar profit-taking on Friday afternoon was linked to investors being suspicious the FOMC Minutes will be perceived as unexciting, a dovish FOMC minutes release still has the potential to encourage Silver to appreciate towards $16.52 and $16.71. At the same time, an unexpected hawkish comment would lead to a surge in demand for the USD and subsequently pressure metals. This could also encourage a reversal of Friday’s gains, and send Silver back towards support at $15.74, $15.52 and $15.25.


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