Silver price rises on easing US interest rate outlook

on Oct 14, 2014
Updated: Oct 21, 2019
Listen, Tuesday, October 14: The price of silver has extended its gains today as speculation the US Federal Reserve may delay raising borrowing costs, due to slowing global growth, continued to support precious metals.

Silver for immediate delivery was up 0.17 percent at $17.49 per Troy ounce as of 08:33 BST, and was trading six percent below its 50-day simple moving average of $18.62. Yesterday saw spot silver extended last week’s rally. It has gained over five percent since Monday last week, when it touched a four-year low of $16.65.
The rally was spurred on Wednesday by minutes from the latest Fed meeting in September, which showed several officials had voiced concerns that expansion “might be slower than they expected if foreign economic growth came in weaker than anticipated”.

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Higher interest rates would boost the dollar, while decreasing demand for zero-yielding assets such as silver. The easing of rate hike expectations put the greenback under pressure and the US dollar index (DXY) recorded its first weekly decline in over three months on Friday. The gauge stood at 85.57 as of 09:22 BST.
Precious metals are likely to be in demand as a global equity market selloff today saw Japan’s Nikkei 225 dive 2.4 percent, or 364 points, to a fresh two-month low of 14,936 points. Japanese stock exchanges were shut for a national holiday yesterday.

According to IG analyst Brenda Kelly:

“With the gap up from the Friday close now filled, the bounceback in risky assets today means the $17.70 level remains the barrier to upside for silver. […] A move through here could see the bearish channel from the $21.50 July highs broken, and puts the $18 marker in sight.”

The price of silver for December delivery was flat at $17.50 as of 08:37 BST, on the COMEX in New York. Kitco News analyst Jim Wyckoff noted that silver futures closed near the session low yesterday. In his view bears still held the firm overall near-term technical advantage:
“Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at the contract low of $16.64.”
Based on the most widely traded COMEX contracts, those for December delivery, with a total volume of trade in gold and silver at 24,315 contracts as of 08:37 BST today, the gold:silver ratio is currently at 70.52, down about 0.3 percent from yesterday’s close of 70.74.


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