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Silver prices have been sideways this week, cooling off from a mid-June rally sparked by inflation-minded investors wary of the U.S. Federal Reserve's dovish talk.
Prices of the white metal were up just 0.7% by the close of market yesterday (Wednesday) at $21.20 an ounce and were actually trading lower than the week's start on Thursday morning. This was after a rally that began the week of the Fed's FOMC meeting, when Fed Chairwoman Janet Yellen's reticence on inflation prompted traders to pour into alternative investments. Volume was up 129.5% on the day of the FOMC meeting, and silver traded up 6.1% on the week.
The next week, silver volume steadied and prices saw a very modest 1.3% gain, buoyed by traders who dragged their feet on the Fed momentum. This week it has slowed down even more ahead of the holiday weekend.
Silver has ebbed and flowed this year. Its prices saw big gains in February when it surged about 15% to a closing high of $21.96 and hit an intraday high of $22.18. But all of the year's gains were erased moving into April, with Yellen once again a likely culprit. Her talk of earlier-than-anticipated interest rate hikes spooked investors out of precious metals, and the descent pushed the price of silver down to $18.80 by the start of June.
From that point on, silver "has almost not looked back since, with nary a down day in that time," said Money Morning Resource Specialist Peter Krauth. It has seen its most productive month, tallying a 12% increase in June that has since been blunted by thin holiday trading.
"Very recently speculators were the most bearish in a decade," Krauth said. "I think silver prices have been strong because they've simply lagged for a long time."
Here's where we see silver prices going next.