Silver price retreats from one month high

The price of silver has fallen so far in today’s trading, pulling back from yesterday’s one-month high. The precious metal has fallen under pressure as a recent sector-wide downtrend in commodities took its toll on silver, offsetting safe-haven bids.

Silver for immediate delivery had shed 1.2 percent, or 20 cents, to $16.81 as of 06:32 GMT, and was trading over four percent above its 50-day simple moving average of $16.16. Yesterday, after gaining nearly three percent, the precious metal closed above the $17 level for the first time since 11 December. According to a precious metals trader in Sydney quoted by Reuters: “We are giving back some of the gains because of the overall unwinding of positions in commodities”.

Bloomberg cited a note from Huang Wei, an analyst at Huatai Great Wall Futures Co., as saying: “Rising economic risk in Europe, partly driven by political uncertainty in Greece, is boosting haven demand […] The differences in monetary policies between the US and Europe will drive the dollar higher versus the euro and it will be difficult for precious metals to sustain rallies.”
The price of silver for March delivery had shed 23 cents, or 1.3 percent, to $16.84 as of 06:34 GMT. Scotiabank wrote in a report from yesterday that there has been a shift in momentum indicators toward an increasingly bullish bias. However, most analysts remain unconvinced that silver will be able to hold on to its gains through the year. According to a Barclays research note from yesterday, silver will average $15.20 per ounce in 2015 as “the silver balance continues to point to further weakness, and we believe silver remains susceptible to the downside”.

The bank pointed out that market is set to remain at a surplus of 5,156 tonnes: “There have been mine closures as a result of lower prices but output has not been hugely affected”.

Based on the two most actively traded COMEX contracts, with a total volume of trade in gold and silver of 29,421 contracts as of 06:34 GMT today, the gold:silver ratio was at 73.03. Scotiabank reported that yesterday the ratio plunged to its lowest level since mid-December.