Last week was another challenge for the price of silver per ounce.
Silver prices dropped 5.8% on Tuesday alone and are down about 17% since peaking in early August.
What triggered this sell-off?
Well, it's mostly thanks to Fed officials saying they think the case for a rate hike has improved.
Cleveland Fed President Loretta Mester even pointed to November's meeting for a possible hike. Then, Richmond Fed President Jeffrey Lacker called for higher rates now, saying the Fed is close enough to its 2% inflation and full employment targets.
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Plus, a report surfaced on Tuesday about ECB officials indicating it could be time to start tapering the central bank's asset purchase program, ahead of schedule. The ECB has been buying 80 billion euros in bonds monthly in an effort to stimulate through QE.
Thirdly, the price of silver per ounce tends to closely follow gold. Gold is off about 8% from its August highs.
In the meantime, there are all sorts of calls for higher and lower prices from here. First, here's a look at how silver trended last week, and where I see the price of silver per ounce headed from here...
Why the Price of Silver per Ounce Is Trending Lower
Silver prices started Monday at $19.13, but succumbed to selling most of the day to close at $18.79.
Tuesday saw major action for both silver and gold. At the NY open, the price of silver per ounce was trading at $18.66, only slightly lower than its previous close. Then silver tanked and closed at $17.78.
Wednesday was a lot tamer. Silver prices actually opened a bit higher at $17.85, but by 1:00 p.m. had sold down to $17.56. They managed a mini rally back up to $17.73 by the close.
Thursday brought more aggressive selling once again. At the open, the price of silver per ounce was priced at $17.68, then immediately dropped. Silver prices closed out Thursday at $17.29.
Friday had silver open on strength, reaching $17.52 by the 8:00 a.m. open. But sellers got the upper hand and pushed it down to $17.11 at 11:00 a.m. From there, it soon recovered and was trading back up to $17.50 by late afternoon.
All this action was at least partly affected by the U.S. Dollar Index, which enjoyed considerable strength over the past week.
So after this harrowing sell-off, what can we expect from the price of silver per ounce going forward?
Here's Where the Price of Silver per Ounce Is Headed Now
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Silver prices have been dragged down to a three-month low, apparently suffering this past week their largest one- and two-day decline since January 2015. There's no doubt the metal's been inflicted with considerable sentiment and technical price damage.
Three weeks ago I said: "...it does have downward momentum right now. I think the upcoming FOMC meeting could be significant. If there's follow through on weakness, we could see it test the $17-$18 range."
That's where we are now...
You can see that silver prices this week dropped steadily, touching the 200-day moving average. This price may act as support. But if silver breaks below that level, the next likely target would be $16.
Nonetheless, macroeconomic and geopolitical challenges and uncertainties remain supportive. Once we get this correction behind us, silver should begin to march higher toward $22 this year.
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