Silver price on course for downside correction, analyst says

Silver prices will remain range-bound over the next couple of weeks, but a downside correction is most likely to follow, Bank of America Merrill Lynch’s head of global technical strategy MacNeil Curry said yesterday in an interview with CNBC.

Curry argued that silver being unable to break past any meaningful topside level with the dollar having fallen nearly seven percent from its mid-April peak was an indication that the white metal was on course for a slide.

"The fact that it hasn't been able to make any kind of headway despite a weakening buck in the last two months speaks volumes to the fact that the path of least resistance is still significantly lower here," Curry said.

Silver June futures on the COMEX division of the New York Mercantile Exchange have risen in line with the Dollar Index since mid-April, climbing about 4.9 percent, whereas the dollar has slipped 4.5 percent.

As of 06:46 BST today, the contract had shed 0.16 percent on the day to $17.043 per troy ounce, bringing this week’s tally to a three percent loss. Meanwhile, the US Dollar Index has climbed about 2.2 percent this week.

Curry noted that the near-four percent loss the white metal logged yesterday could only be a foreshadowing of what’s to come, and advised investors to keep silver on the radar, as it could play out to be “an excellent shorting opportunity”.

Investors will be digesting minutes from the Federal Open Market Committee’s (FOMC) April meeting due for release later today, looking for cues on potential changes to monetary policy following the Fed’s cautious stance in its most recent statement.

Potential dovish signals in the Fed’s minutes could weigh on the greenback, lending support to precious metals.

In addition to the FOMC minutes, investors also eye Friday’s CPI data, the key metric the Fed uses in its assessment of the state of the US economy. Analysts expect consumer prices to have risen by 0.2 percent on a monthly basis in April, as they did March, and by 1.7 percent on an annual basis, down from 1.8 percent from the previous month.