By FXEmpire.com
Outlook and Recommendation
Silver ended the month at 30.83
Silver prices have followed Gold’s lead, but $32/oz is a relatively high price given the global economic outlook and the market’s supply surplus. Lack of upward momentum led to stale long liquidation by the funds in March, with the net long fund position falling 38%.
Silver follows Gold, but has not damaged its chart to the same extent as Gold has Silver prices have followed a similar path to that of Gold with prices falling from $37.51/oz on 29th February, to $31.10/oz on 22nd March – a drop of 17%. The pull back has weakened the chart picture, indeed it even triggered a head and shoulder top formation, but so far there has been limited follow through weakness and prices have managed to hold above the March lows. For now it appears that Silver is in consolidation mode, but whether that remains the case following the airing of the latest FOMC meeting minutes, that suggested further quantitative easing was less likely, remains to be seen. Following the release of the minutes, Silver prices started to weaken again and have once moved below the neckline of the head and shoulder formation, which is at $32.40/oz.
In April, silver did not move independently of gold and followed so closely in its footsteps, that the charts could almost be overlays.
The change will come in May, as silver is building a new demand in the US as it is replacing gold in jewelry as gold has priced itself out of the markets, especially during these cautionary times.
Silver prices did manage to get some lift in April, but overhead supply seemed evident above $33.30/oz. However, considering the market is in a supply surplus, global growth is subdued and the EU debt crisis had calmed down, perhaps this was not so surprising. Given the economic slowdown in China and with Europe likely to see flat growth at best in 2012, industrial demand for Silver is likely to be subdued and in turn that will put more pressure on investors to absorb the supply surplus. Considering all this, $30/oz still seems a relatively rich price for Silver.
Economic events for the month of May affecting EUR,CHF, GBP and USD
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Tuesday, May 01 |
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10:00 |
USD |
ISM Manufacturing Index |
54.8 |
53.0 |
53.4 |
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Wednesday, May 02 |
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08:15 |
USD |
ADP Nonfarm Employment Change |
177K |
209K |
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Thursday, May 03 |
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07:45 |
EUR |
Interest Rate Decision |
1.00% |
1.00% |
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08:30 |
EUR |
ECB Press Conference |
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08:30 |
USD |
Initial Jobless Claims |
380K |
388K |
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Friday, May 04 |
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08:30 |
USD |
Unemployment Rate |
8.2% |
8.2% |
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08:30 |
USD |
Nonfarm Payrolls |
170K |
120K |
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Thursday, May 10 |
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07:00 |
GBP |
Interest Rate Decision |
0.50% |
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Wednesday, May 16 |
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04:30 |
GBP |
Claimant Count Change |
3.6K |
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Click here for updated Silver News.
Originally posted here
