Silver price declines as equity markets stabilize
iNVEZZ.com, Thursday, January 08: The price of silver has fallen so far in today’s trading session, extending yesterday’s losses. A rebound in global equity markets along with dollar strength have reduced demand for the precious metal.
Silver for immediate delivery had fallen 0.3 percent, or five cents, to $16.44 as of 06:26 GMT, and was trading 1.8 percent above its 50-day simple moving average of $16.16. On Monday, it touched $16.68, its highest level since 15 December as global equities fell on worries that Greece may leave the eurozone.
However, stock markets rallied yesterday on the back of a modest rebound in oil prices and the release of minutes from the Fed’s latest meeting on monetary policy. Gary Wagner, editor of The Gold Forecast, wrote in a note from yesterday: “The rise in oil helped stock prices, which had been worried about the steep, fast fall in energy”.
The price of silver for March delivery had shed seven cents, or 0.42 percent, to $16.47 as of 06:24 GMT. Scotiabank wrote in a report from yesterday that momentum indicators are modestly bullish: “Recent gains have pushed silver toward the upper end of its triangle pattern with resistance expected at $16.90 and support seen around $15.70.”
Minutes of the Federal Reserve’s 16-17 December FOMC meeting saw the central bank call for a patient stance on monetary policy, but did not dissuade analysts from expecting an interest rate hike by mid-2015. Reuters quoted Jim Dunigan, chief investment officer of PNC Wealth Management, as saying:
“(The Fed) will wait and see what the rest of the global picture looks like, particularly in coordination with some of the actions of the ECB. I still think it puts them in a mid-2015 time frame”.
Yesterday, the DXY dollar index, which pegs the greenback against six of its major peers, touched a fresh nine-year high of 92.265. The gauge stood at 92.181 as 06:20 GMT, up 0.32 percent intraday. A stronger dollar tends to have a negative influence on the price of silver, as it makes dollar-denominated precious metals more expensive when converted to other currencies.
Based on the two most actively traded COMEX contracts, with a total volume of trade in gold and silver of 18,739 contracts as of 06:24 GMT today, the gold:silver ratio was at 73.40. The ratio was up 0.19 percent from yesterday’s 73.26 close.