Start the conversation
Silver prices today (Wednesday, July 26) are off 0.4% from the one-month highs seen yesterday, but they won't stay down for long…
Silver currently trades at $16.43 an ounce, down 0.4% from yesterday's $16.50 close. That was the highest settlement since June 30, when the metal closed at $16.57, according to data from FactSet.
The silver price has been volatile in July, with the metal falling 7.2% from $16.57 on July 1 to a 15-month low of $15.37 on July 7. It has since rebounded 6.5% to today's price of $16.43.
With volatile price swings this month, our readers want to know if silver prices will keep going higher in 2017. That's why Money Morning Resource Specialist Peter Krauth – a 20-year veteran of the precious metals markets – is going to share with you his silver price prediction for the rest of the year.
And Peter says silver prices are heading higher in 2017, even though they dipped today on this news…
This Silver News Today Is Dragging Prices Down from 1-Month Highs
The primary reason for the silver price decline is the rising U.S. dollar in response to today's FOMC meeting. At 2 p.m., the U.S. Federal Reserve announced it will keep the federal funds rate – which is the benchmark U.S. interest rate – unchanged in the 1%-1.25% range established in June. Leading up the announcement, the U.S. Dollar Index (DXY) climbed 15 basis points from 94.08 at market open to a peak of 94.23.
Despite rates staying unchanged today, the big topic around the meeting was the current annual inflation rate of 1.7%. That's below the Fed's 2% target, indicating the economy's growth may be slowing down more than the Fed anticipated.
In fact, the inflation rate has been trending downward this year, falling below the Fed's 2% target, as you can see in the chart below…
Since inflation measures the rise in prices across the entire economy, lower inflation means people are buying fewer goods and services. In turn, this forces prices lower to match the lower demand.
The falling inflation rate is a signal the Fed doesn't want to raise rates right now.
But even though today's FOMC meeting ended without a rate hike, the price of silver has been known to make knee-jerk declines on the second day of FOMC meetings anyway. When the first meeting of 2017 ended on Feb. 1, the silver price dropped 0.5% from $17.54 to $17.45 on the day. At the end of the May FOMC meeting on May 3, the metal lost 1.7% from $16.83 to $16.55.
These declines could be the result of jittery silver investors who may sell their positions on fears of an unexpected spike in the dollar after a Fed rate hike announcement. After all, silver prices tend to decrease when the dollar rises in value since the metal is globally priced in the dollar. That means a rise in the dollar makes silver more expensive to users of other currencies, thus reducing international silver demand and lowering prices.
But Peter believes this bearish behavior is only short term. He actually sees today's 0.4% dip as a buying opportunity before silver prices rally to his bold price target.
And despite any day-to-day volatility for silver the rest of the year, investors who hold the metal through the year could be rewarded with double-digit returns.
"Though there may be possible short-term price pullbacks based on dollar fluctuations, I think the silver price has plenty more room to run in the second half of 2017," Peter told Money Morning readers this week.
Here's Peter's bold and bullish silver price target – as well as the biggest reason he sees it getting there…