Silver prices in 2017 gave back some of their year-to-date gains after the metal fell 2% last week. With that weekly loss and today's 1.1% decline to $17.04, the metal is now up only 6.6% since Dec. 31, 2016.
It's true that silver gave back most of last week's rally later in the week following a strong 0.9% rise from Monday through Tuesday. But looking at the silver price over the last month, we can see that it's climbed 3.9%.
Silver broke above the crucial point of $17.50 last week, a price considered to be a confluence of the 50-day and 200-day moving averages. However, we now see that it's a resistance level since the price of silver has fallen back toward the $17 level.
Relative to gold, silver is still very cheap. That relationship began correcting in silver's favor in early May, and I expect that trend to resume shortly.
I think the next expected rate hike after the FOMC meeting could well be the impetus triggering silver prices to run higher. If the Federal Reserve does raise interest rates, it would support my long-standing prediction of $22 silver by the end of the year. That would be a 29.1% gain from today's $17.04 price.
I'll explain why the Fed rate hike could be bullish for silver moving forward. First, however, let's look at what made prices drop 1.7% last week…
Price of Silver Sees a 2% Weekly Loss (June 2 – June 9)
After settling at $17.52 on Friday, June 2, silver opened higher on Monday, June 5, for a quiet day of trading. It started at $17.54 and moved mostly sideways throughout the day to close at $17.53 for a small 0.1% gain. That was the first time the metal closed above $17.50 since April 25.
Then came the action on Tuesday. Even with a flat U.S. Dollar Index (DXY), the silver price saw a solid run higher. After opening at $17.64, it gradually gained throughout the day to settle 0.9% higher at $17.68.
But on Wednesday, June 7, silver prices gave up those gains and more. An early morning surge in the DXY caused silver to sell off to $17.57 at the open. Prices popped to $17.68 but fell back down again once the dollar stabilized and moved sideways. That was enough to spook buyers, and the price of silver retreated 0.7% to close at $17.56.
This chart shows how the DXY trended last week…
The metal kept getting crushed on Thursday as sellers hit the bid and buyers were absent. Silver opened higher at $17.58, but that was before the dollar started climbing higher above the 97 level. This dragged silver lower to $17.41 by the close, marking a 0.9% loss on the day.
On Friday, June 9, selling momentum continued. Silver opened at $17.23 and fell down to $17.17 by the end of the day. With that 1.4% decline, silver prices posted a weekly loss of 2%. That selling momentum has spilled over into this week as the price of silver today is down another 1.1% to $17.04.
Urgent: An incredibly rare gold anomaly is shaping up in the markets as we speak — one that has occurred ONLY twice in the past 20 years. And it's about to happen again. Details here…
Despite this four-day losing streak, I'm confident silver is poised for a big rebound after the June FOMC meeting on Tuesday and Wednesday. Although higher interest rates tend to boost the dollar, they have actually been bullish for the silver price if you examine the metal's behavior around the last two rate increases.
Here's why I believe this week's Fed meeting supports my forecast 29.1% gain to a $22 silver price by the end of 2017…
Why the Fed Rate Hike Fits into My Prediction for Silver Prices in 2017
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.