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Silver Gains Positive Traction After In-line GDP Report

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Silver Gains Positive Traction After In-line GDP Report

Silver prices are attempting to bottom and gain traction for a potential move higher.  One of the key lessons in short trading is to never short a quiet market.  Commodity prices have stabalized in the wake of weaker than expected US data which has ended the torid pace of the climb in US yields, which has allowed the dollar to pause.

Chinese data on Monday continued to display a contraction.  Second quarter GDP came in at 7.5% year over year which is exactly the official government forecast, but the number was  down from 7.7% in the first quarter quarter. Industrial production remained flat at 9.0% year over year.  Retail sales edged higher to 13.3% year over year, which shows that the consumer is still relatively strong.

The stabalization of Chinese data combined with slightly disappointing US data acould allow the dollar to move lower and silver prices to move higher.  Silver forward rates eased against dollar rates making holding silver in the forward markets less expensive.

Positioning did not seem to change drastically as reflected by the latest Commitment of traders report for the week ending July 9, 2013.  Accoring to the CFTC’s report, managed money increased long combined futures and options positions by 88 contracts and reduced short positions by 853 contracts.

Silver prices have held support levels near the 10-day moving average near 19.56, after closing above that important benchmark early last week.  Resistance is former support near 21.50.  A close above resistance would put silver back into a ranged capped by 25 per ounce.

Momentum as reflected by the MACD is positive, after generating a buy signal mid last week.  The trajectory of the MACD is upward and continuing to expand.  This is an encouraging sign for positive price action.

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