Silver Volatility Likely to Continue
Source: The Street, Karvy Global (8/23/10)
"Price declines keep silver volatile."
During this week, the dollar may remain firm on positive U.S. economic data in the form of rising durable goods orders and falling jobless claims. However, the second quarter GDP figures could show a slowing down in the economy, denting market sentiment and the dollar index. Overall, the dollar may result in additional volatility in silver prices.
Moreover, declining PMI numbers from the eurozone may further strengthen the dollar. Data from Germany seem mixed with lower government spending, a major cause of concern.
COMEX silver futures for September delivery traded volatile last week. The white metal experienced a high of $18.62 an ounce and closed at $17.99, below the psychological mark of $18. The hammer candlestick formation in the weekly COMEX silver chart implies that the downtrend will continue this week. While silver is in a short-term consolidation mode, the trend can be confirmed only after the metal breaches $17.79 an ounce level.
Last week, silver failed to take cues from gold and closed down 0.65% to $17.99 an ounce on the COMEX.
The gold-silver ratio advanced to 68.21 from 67.09, as silver fell while the yellow metal strengthened. Silver for spot delivery on the COMEX closed at $18.00 per ounce, while futures ended at $17.99 per ounce, suggesting that silver prices are in backwardation. In contrast, COMEX gold for spot delivery closed at $1227.8 per ounce, while futures ended at $1227.6 per ounce, indicating that gold prices are in backwardation as well.