Silver price eases as dollar strength and inflation expectations keep sentiment bearish

on Dec 3, 2014

**Silver Price**

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins., Wednesday, December 3: The price of silver has fallen so far in today’s trading session. Market participants have remained bearish as US dollar strength and low inflation expectations continued to weigh on precious metal prices following recent volatility.

Silver for immediate delivery had shed 0.8 percent, or six cents, to $16.37 as of 06:35 GMT, and was trading 1.7 percent below its 50-day simple moving average of $16.66. On Monday the precious metal plummeted to a five-year intraday low but managed to rally over 13 percent and close the session in positive territory. David Govett, a trader at Marex Spectron, was yesterday quoted by The Bullion Desk as criticizing Monday’s sharp volatility, calling the session ‘mad’:

“If someone can tell me what on earth happened yesterday (Monday) and why, I would be delighted to hear it. A truly mad session in Asia saw gold and silver get walloped on the opening and then bought all the way back up to unchanged and then higher in London and New York”.

According to him, these moves have recently increased both in severity and frequency and are “just serving to keep most sane people out of the market, which in turn fuels more stupidity. These are not markets, they are particularly dangerous casinos”.

Bloomberg quoted Mark To, head of research at Wing Fung Financial Group, as saying in a note:
“The expectation for the US economic recovery to continue, and the lower inflation outlook because of falling oil prices will keep precious metals under pressure […] Investors will keep an eye out for the US payroll report”.

On Friday the US Bureau Of Labor Statistics will release the jobs report for November, with its impact on the dollar set to influence the price of precious metals. IG reports that the unemployment level is expected to remain unchanged at 5.8 percent while the number of jobs created is forecast to have risen to 222,000 from 209,000 in the preceding month.

“Precious metal prices have been out of favour since July. For starters, the US dollar has rallied. Moreover, inflation expectations have fallen substantially because of a sell-off in oil prices,” ABN Amro analyst Georgette Boele said in a note quoted by Reuters.

The price of silver for December delivery had shed eight cents, or 0.48 percent, to $16.35 as of 06:52 GMT. The more actively traded March contract also stood at $16.35, down 0.66 percent intraday.
According to a report from Commerzbank, silver will end 2015 at $18 per ounce, after hitting $16 by mid-2015.

“The silver price next year can be expected merely to move in harmony with the gold price despite currently being at its cheapest level relative to gold for nearly six years, […] Unfavourable fundamental data argues against any better performance.”

Based on the two most actively traded COMEX contracts, with a total volume of trade in gold and silver at 26,451 contracts as of 06:55 GMT today, the gold:silver ratio was at 73.35, up 0.8 percent from yesterday’s 72.73 close.


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