Silver Prices Underpinned by Gold Demand, Softer Dollar Also Supportive

With the dollar unable to make any impression and gold prices moving sharply higher, there was solid support for silver prices during the day, although conditions were notably choppy.

Silver traded in tight ranges late in the US session on Tuesday before edging slightly lower in Asian trading, although there was solid support above the $17.50 level.

The latest Chinese GDP data was in line with expectations with a third-quarter figure of 6.7%, which also matched the previous quarter, although there was a slight miss on expectations for the industrial production figure.

Gold prices pushed sharply higher in European trading on Wednesday, supported by a slightly weaker dollar and decline in bond yields. The rally in gold prices was an important factor in providing near-term support to silver with a significant move higher.

The US housing data was mixed with a significant slowdown in housing starts to 1.05mn for September offset by an increase in building permits to an annual rate of 1.23mn from 1.15mn previously.

Silver pushed to highs above $17.75 just ahead of the US data, but was unable to sustain this level and retreated quickly back below $17.70.

Crude oil prices pushed sharply higher following the latest US inventories data and there was fresh speculation that traders were looking to re-position themselves into the energy complex and away from precious metals. Nevertheless, there was still solid underlying support for silver with rising industrial commodity prices providing net support.

The dollar overall was unable to make an impression, especially against commodity currencies, but did move off its worst levels, which curbed further potential silver support.

There was further volatile trading during the US session with a side to below $17.60 quickly reversed as gold prices rallied once again.

The ECB policy meeting will be watched closely on Thursday and is likely to have a significant impact on metals prices with the potential for choppy trading conditions.

Silver Prices 4H Chart


Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.