Silver Price Recovers On Dollar Reversal, Volatility Increases

Dollar moves tended to dominate on Wednesday and, after falling sharply as the US currency advanced, there was a reversal during Trump’s press conference with silver prices regaining ground.

Silver prices were confined to narrow ranges late in Tuesday’s US session with stabilisation around $16.85 and selling interest on approach to $16.90.

The US currency gained some underlying support during the European session and silver gradually retreated to the $16.75 area. There were no US economic releases during the US session.

The dollar strengthened substantially further in early US trading with EUR/USD breaking below the 1.0500 level, while USD/JPY rose to highs above 116.80 and the trade-weighted index strengthened close to 0.80% on the day.

The dollar gains triggered renewed selling pressure on silver, especially with a fresh increase in US bond yields during the New York session. There was a decline in silver to lows near $16.50 as the US currency advanced, especially as gold lost early traction.

The dollar reversed course during President-elect Trump’s press conference in very choppy trading conditions with USD/JPY dipping back below the 116.00 level with lows near 115.50 and EUR/USD moved back above 1.0500 with the dollar erasing all of its daily losses.

There was a fresh advance in US bond prices during the testimony as US 10-year yields declined to the 2.36% area.

The combination of a dollar retreat and decline in bond yields helped silver prices recover ground, especially as US equities moved into negative territory.

In this environment, silver rallied to the $16.75 area as volatility remained at elevated levels.

Trends in the dollar and bond yields are likely to remain extremely important in the short term with markets also monitoring developments surrounding risk appetite amid trade concerns.

Silver Prices 4-Hour Chart

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Tim is a contributing author to EconomicCalendar.com. 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.