Silver Prices Hold Higher after Massive Rally

Silver futures traded at one-month highs Friday after an eventful week added more than 5% to the value of the precious metal.

Silver for July delivery slipped 3 cents or 0.2% to $17.24 a troy ounce on the Comex division of the New York Mercantile Exchange. The grey metal has rebounded dramatically since the start of June, with gains accelerating after last Friday’s US nonfarm payrolls report showed the slowest pace of hiring in nearly six years.

The grey metal faces firm support at $16.50. On the upside, immediate resistance lies at $17.32, the high from May 11. A move above that level could lead to a re-test of 15-month highs near $17.82.

Momentum readings have turned positive this month, reflecting silver’s large gains. Relative strength is holding steady in the low 60s, while the MACD is also reversing higher. Both indicators point to further upside in the days ahead.

silver prices daily chart 06-10-16

Gold futures were also trading steady Friday after a more than 2% gain this week. Comex gold for August delivery traded within a narrow range before settling at $1,270.40 a troy ounce, little changed from the previous close.

Platinum prices experienced the most dramatic pullback Friday. The precious metal declined $9.55 or 1% to $993.55 a troy ounce after closing above $1,000 in the previous two sessions.

As of Thursday, the value of one ounce of gold was equivalent to 73.62 ounces of silver. That represents a decline of around 3.1% this week, reflecting silver’s large advance relative to gold.

The silver rally was contained Friday by a rebounding US dollar. The dollar index, which traces the performance of the US currency against a basket of six currencies that includes the euro, yen, pound, franc, Canadian dollar and krona, advanced 0.3% to 94.20. The index climbed more than half a percent on Thursday, having cemented gains after government data showed an unexpected drop in weekly jobless claims.

The number of Americans filing for first-time unemployment benefits declined 4,000 to a seasonally adjusted 264,000 in the week to June 3, the Labor Department reported Thursday. Jobless claims have stabilized since reaching more than one-year highs in early May. They have remained below the key 300,000 threshold for 66 consecutive weeks, offering hope that last month’s dismal jobs numbers were only a temporary blip in an otherwise solid labour market recovery.

In other data, Germany’s harmonized index of consumer prices was confirmed at zero in the 12 months through May, a sign the European Central Bank’s ambitious stimulus program still has not yet resulted in higher inflation. Compared with April, consumer prices in Europe’s largest economy rose 0.4%, official data showed.

In energy, oil prices declined for a second consecutive day, with US crude futures slipping below $50 a barrel for the first time since the start of the week. West Texas Intermediate (WTI) crude futures declined 66 cents or 1.3% to $49.90 a barrel on the New York Mercantile Exchange, as a rebounding dollar weighed on the energy markets. Brent futures were last down 58 cents or 1.1% at $51.37 a barrel on London’s ICE Futures exchange.

Equity markets declined sharply Friday, with European stocks experiencing a large selloff on waning risk sentiment tied to lower oil prices and weak global growth. The pan-European Stoxx 600 was off 1.9% in midday trade, with all sectors reporting sharp losses.

All of Europe’s major bourses were trading sharply lower. London’s FTSE 100 Index was down 1.6%, while Germany’s DAX Index plunged more than 2%. Markets in France and Spain were also trading sharply lower.

Asian markets also faced setbacks Friday, with stocks in mainland China and Hong Kong finishing lower. Japan’s Nikkei 225 index also closed down in the final session of the week.

American stock futures were lower across the board, pointing to a soft start to the day.

Several market moving economic data events will make headlines next week, beginning on Monday with a spate of Chinese data ranging from retail sales to urban investment. Japanese industrial production, UK CPI and US retail sales figures will all make headlined on Tuesday.

Later in the week, the US will report on industrial production and consumer inflation while the UK and Australia will release official employment numbers.

The Federal Reserve and Bank of England will also hold monetary policy meetings next week, which will be closely followed by the financial markets.

Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.