Silver price eases as markets eye US economic reports

By:
on Nov 26, 2014
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iNVEZZ.com, Wednesday, November 26: The price of silver has fallen so far in today’s trading session after chalking up its longest winning streak since June. The precious metal came under some pressure during the previous session following a better than expected preliminary US Q3 GDP report but managed to recover. A number of US economic reports scheduled for release later today before tomorrow’s Thanksgiving holiday.
Silver for immediate delivery had shed 0.32 percent, or five cents, to $16.60 as of 05:38 GMT, and was trading 1.4 percent below its 50-day simple moving average of $16.84. Yesterday, the precious metal fell as much as 0.8 percent following the release of a better than expected US GDP reading.
According to the preliminary report from the Bureau of Economic Analysis, the economy expanded 3.9 percent in Q3 on an annual basis, well above the 3.3 percent expectations reported by IG. Silver saw an initial dip following the release, but managed to quickly rebound on short covering and bargain hunting.
Recent positive US economic data may prompt the Federal Reserve to raise interest rates sooner than expected, which may reduce demand for silver and other zero-yielding assets.
Traders will be eyeing more releases from the US due later today, with weekly jobless claims, durable goods orders, personal income, the Chicago PMI, new home sales and pending home sales all scheduled for release. Some reports have been brought forward due to tomorrow’s Thanksgiving holiday. A robust economic outlook also tends to boosts the dollar and put pressure on silver. According to Kitco News analyst Jim Wyckoff:

“The US dollar index hovering near a four-year high continues to provide a bearish anchor for the precious metals.”
The DXY dollar index, which pegs the greenback against six of its major peers, stood at 87.88 as of 06:10 GMT, down less than 0.1 percent intraday. A stronger greenback tends to have a negative influence on silver, as it makes dollar-denominated precious metals more expensive when converted to other currencies.
The price of silver for March delivery had fallen over six cents, or about 0.3 percent, to $16.65 as of 06:19 GMT on the COMEX in New York. According to Scotiabank the precious metal has continued to press higher after it managed to break the bearish trend on Friday.
“We see 17.56 as the 38.2% Fibo correction target of our 21.57 to 15.08 down move. The 16.71 area was the early October low so it has so far proved resistance. Support is seen at 16.30 from the old trend line.”
Based on the most actively traded COMEX contracts, with a total volume of trade in gold and silver at 25,330 contracts as of 06:19 GMT today, the gold:silver ratio was at 72.06. It has fallen nearly four percent from its recent multi-year high above 75. Next support is at 70.49, Scotiabank said.

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