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Silver holds steady as bond yields consolidate

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Silver holds steady as bond yields consolidate

Silver prices remain in a tight trading range as precious metal prices remain in limbo following the flight of US yields.  Economic data in the US has been mixed over the past week, which should be culminated in this weeks release of 2nd quarter GDP.  Expectations for growth are .8%, which can barely be considered an expansion.

Silver prices moved similar to other currencies against the US dollar.  The dollar has been trading in a choppy range since the perceived announcement by Fed Chairman Ben Bernanke that the FOMC might considered the tapering of its bond purchase program during their September FOMC meeting.  The Fed meets in July and expectations are for no movement and very little change the the Fed economic forecast.

Yields in the US has backed up to 2.6% and have remained around this level since breaking out in late May.  Although the ecnomic data has not yet justified these levels, market participants believe that an eventual tapering will generate further liquidation in bonds.

Given that silver prices trade as a currency, the stronger dollar has eroded the value of silver.  Silver is also considered an industrial metal and the decline in economic performance in China and the US have detracted from Silver’s value.

Technically, silver remains in a tight range below resistance near a horizontal trend line at 20.63.  Support is seen near the 10-day moving average at 19.97, and then lower at the bottom end of the recent range near 18.20.

Momentum is positive with the MACD (moving average convergence divergence index) is printing in the back, but the trajectory of the index is flattening.  The RSI (relative strength index) which is an oscillator that measures overbought and oversold levels is printing near 49 which is in the middle of the neutral range.

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