Silver prices have traded in a wide range in October, falling as low as $16.62 on Oct. 4 before reaching a monthly high of $17.41 on Oct. 13. The choppy price action has continued over the last week, with the metal down 2.1% over the last five trading sessions.
This volatility is frustrating the silver bulls, and I don't think it's over quite yet...
It's true that the gold/silver ratio is down to 75.5 today from its month-ago high near 77, meaning it currently takes 75.5 ounces of silver to buy one ounce of gold. But it's important to remember that's still a relative measure.
Silver stocks have also backed off from their recent high. The Global X Silver Miners ETF (NYSE Arca: SIL) - which tracks the performance of silver mining companies - is down 3.1% from its one-month high on Oct. 12. I'll be watching to see if silver stocks can put in another low, ideally higher than that one set a month ago.
But the biggest factor continues to be the U.S. dollar, which has weighed on the silver price this past week. The U.S. Dollar Index (DXY) - which pegs the greenback against the yen and euro, among other currencies - is up from 93.49 to 93.86 since last Tuesday.
The DXY's rally will likely continue in anticipation of a new U.S. Federal Reserve chair and December rate hike. According to the CME FedWatch Tool, there's a 96.7% chance the Fed will raise rates at the conclusion of the December FOMC meeting.
Urgent: Executive Editor Bill Patalon just saw something on his precious metals charts he's only seen twice in 20 years. He calls it the "Halley's Comet of investing" - and it could lead to windfall profits. Read more...
With all of these bearish factors in play, I expect the price of silver may see a bit more weakness in the first couple of weeks of November.
But I prefer to focus on the long-term picture, and my silver price forecast shows the metal rebounding before the start of 2018.
Before I get into my year-end price targets, let's take a closer look at the silver price's performance over the past week...
Silver Prices Decline 2.4% Over the Last Week (Oct. 17-24)
Silver opened lower on Tuesday, Oct. 17, starting the session at $17.07. It trended lower throughout the session as the DXY pushed higher to the 93.70 level. By the end of the day, silver prices were trading at $17.04, which was 1.9% lower than Monday's closing price of $17.37.
Here's how the DXY has trended since last Tuesday, Oct. 17...
On Wednesday, Oct. 18, early morning strength in the dollar dragged the price of silver down to $16.90 at the open. But even as the DXY dropped from 93.49 to 93.36 by the end of the day, the silver price still managed to fall 0.2% to close at $17.
But the metal saw a brief rebound on Thursday as the DXY declined toward the 93.25 level. This boosted silver to $17.20 by midday, and it eventually settled at $17.25 for a 1.5% gain on the day.
On Friday, Oct. 20, the dollar bounced back, with the DXY trading near 93.40 by the open. It kept pushing higher during the session, which lowered silver to $17.08 by the close. That marked a 1% loss on the day.
The silver price started this week with an uneventful session on Monday. As the DXY climbed to 93.84, silver was mostly resilient, neither falling nor rising in response. By the end of the day, prices settled at $17.08 for no change from the previous session.
Silver prices today (Tuesday, Oct. 24) are back below the $17 level as the DXY steadily rises toward the 94 level. The metal is down 0.8% and trading at $16.95, while the DXY is up from 93.84 yesterday to 93.89 today.
As I already mentioned, the dollar will be the biggest silver price factor going forward in November and December. While the dollar could keep pushing higher in the short term, I think it will eventually run out of steam by late November. Once that happens, silver will be poised for a rebound before the end of the year.
Here's my silver price prediction for the last two months of 2017...
This Is How High the Silver Price Could Reach Before 2018
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The dollar has clearly been on a roll for over a month and a half now. Since hitting a two-and-a-half-year low of 91.35 on Sept. 8, the DXY has rebounded to 93.89 today.
A few weeks ago, I told you to watch for the DXY to surpass the 93.80 level - one of the last highs that took place on Oct. 6. We're watching this happen today, and the DXY has also recently surpassed one of its most important technical indicators...
The DXY has hovered above the 50-day moving average (black line) since late September, meaning the dollar is in rally mode. With that, we should expect more strength in the dollar over the next few weeks.
Further momentum in the dollar is also supported by trading activity. According to sentimenTrader, U.S. dollar hedgers have dramatically reduced their short bets on the greenback. The last time they had a similar position was in early 2014, just before the dollar began a big rally.
Professional traders reducing their short positions on the dollar indicates they're becoming more bullish on it. This shift in sentiment means the dollar is poised to maintain its current rally.
Ongoing strength in the dollar could suppress silver prices, but I think they may soon rise together. I would watch for the DXY to peak somewhere near the 96 or 97 level before finally correcting itself.
With that in mind, I see silver prices making a run for the $18.00 to $18.50 range before the end of November. They could push even higher when silver investors and traders realize any new Fed chair will be dovish and any further rate hikes probably won't happen after December.
Up Next: Rare Gold Anomaly
Money Morning Executive Editor Bill Patalon just caught something on his gold charts that he's only seen twice in the past 20 years. A $13 billion gold anomaly he calls the "Halley's Comet of investing."
It's very rare, and fleeting, and Bill sees things lining up perfectly to bring some very sizeable precious metal profits to well-positioned investors.