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Silver consolidates waiting for an impetus

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Silver consolidates waiting for an impetus

Silver prices were on the defensive but continue to trade in a tight range as traders wait for an impetus to drive the future direction of precious metals.  The jobs report, released last Friday, did little to help investors as it showed that US economic data might still continue to show mixed results.  Yields tumbled on Friday, only to recapture some of their gains after Monday’s better than expected ISM services report.

With yields in the US bouncing around, it has become difficult for precious metals traders to get a solid gauge on the US dollar.  The yield differential between the US dollar and silver interest rates are generally a factor in the future direction of silver prices.  The US 10-year yield edged higher on Monday and Tuesday, and will likely stay in a range between 2.50-30 for an extended period.  It is unlikely given the recent relatively strength of August’s data, that yields will fall driving the dollar lower and silver prices higher.

Hedge funds added to their long positions in silver futures according to the latest commitment of traders report released for the week ending July 30, 2013. According to the CFTC, managed money increased long positions by slightly more than 1K contracts and increased short positions by 655 contracts.

Silver prices have remained in a 2.32 range between 20.52 and 18.20 since the middle of June.  Short term resistance is seen near the 10-day moving average near 19.87.  Short term support is seen near the recent lows of 19.13.  Momentum on silver prices has come to a crawl with the MACD (moving average convergence divergence) index printing near the zero index level.  The spread is printing on top of the 9-day moving average of the spread.  The RSI (relative strength index) is printing at 44 which is near the middle of the neutral range reflecting consolidation.

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