By FXEmpire.com
Silver had a very weak session on Thursday as the markets expressed concern about the potential of easing by the Federal Reserve. The Chairman of the Federal Reserve has recently suggested that the Fed has additional tools to help the economy if it stalls, and there is open speculation about the possibility of easing now.
If the Fed finds that it needs to ease, there is a twofold situation in this market as a result. For the first part, it is obvious that the value of silver should go higher as the Dollar will be devalued. It will simply take more of those weaker Dollars to buy silver in general. However, there is also an industrial component to the demand for silver as well, and any easing would signal that industrial demand may be weak, and as a result that part of the demand for silver will be weak as well.
The Non-Farm Payroll numbers that come out later today could be one of the biggest indicators as to whether or not the Fed will ease or not. On a strong jobs number, it seems very unlikely that the Fed will ease anytime soon. However, if the jobs number is weak, the market will more than likely speculate that more easing comes as the Fed will be forced to step in.
The $30 to $31 level has been a strong support level lately, and Thursday’s candle closed just barely above it. Because of this, there is a real chance at a breakdown for the session, and as the silver market is very volatile in general, it is prudent to wait until we see how the reaction to the Non-Farm Payroll announcement is. Simply put, today is crucial to determining the next move in this market, as well as many others.
The market will still be a “buy only” one if we can stay above the $30 level, so needless to say this looks like a very important day for us as far as silver goes. With the way it moves however, it is probably safer to step back and let the knee-jerk reaction do its thing first.
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Originally posted here
