Silver heads away from $22/oz

Indications of increased appetite for tightening monetary policy in the latest set of Federal Reserve minutes has taken the wind out of the current silver rally.

We had been enjoying one of the longest winning streaks for silver in recent times, with the white metal surging from $19/oz during the first-half of February. However, the picture has darkened considerably in the aftermath of the latest set of minutes from the Fed, when some members of the committee suggested that the time might be near for an increase in interest rates. This is far too premature really, but it was sufficient to prompt a mini-rout in precious metals.

The recent push through the 200-day moving average on 14 February is, ostensibly, a positive sign, but I wouldn’t say investors have fallen in love with the metal just yet. The 50-day moving average remains pointing upwards, but a crossover above the 200-DMA would be needed to fully reinforce the positive outlook.

The clear failure to push beyond $22 per ounce suggests the downside has now been opened up for silver, at least in the short-term. This would suggest that $20.50/oz is the area to watch in terms of support.

Spot silver chart

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.