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Silver Prices Have Further Room To Fall - Analysts

Kitco News

(Kitco News) - Silver continues to struggle Wednesday, as the market sees its longest daily losing streak since mid-April, with many analysts eying July’s one-year lows as the next price target.

Silver prices have fallen through the key psychological level of $16 an ounce as the market remains near a five-month low. March silver futures last traded at $15.97 an ounce, down 0.61% on the day.

Ole Hansen, head of commodity strategy at Saxo Bank, said that investors should prepare for further losses in the silver market as the metal has struggled to gain significant investor attention in 2017.

“The push through a key retracement level at $16.30 does not bode well for silver’s immediate future,” he said. “I think we need to get to a level that puts the metal back on investors’ radar and that price is lower.”

Hansen said that he expects that silver will continue to underperform gold, looking for the gold-silver ratio to hit 80, before silver buyers step in. Early Wednesday, the gold-silver ratio on Kitco.com hit a one-year high at 79.50.

George Gero, managing director with RBC Wealth Management, said that silver’s industrial component is driving the market in the near-term. He noted that silver has dropped as copper and oil prices have fallen sharply. Tuesday, copper saw its biggest decline in two years as prices fell to a two-month low.

However, he added that pessimism in the marketplace is a little too high and sees the potential for a contrarian reversal.

“I think it is only a matter of time before we see silver start to push to the upside,” he said. “But you need to watch copper and crude to determine silver’s next trend.”

Philip Streible, senior analyst at RJO Futures, said in a recent interview with Kitco News that he thinks the selling pressure in silver is overdone and sees value at these lower levels.

Paul Robinson, market analyst at DailyFx.com, said that gold’s drop below key support could end up dragging silver down to its July lows at $15.19 an ounce.

“A move into the mid-15s or worse could soon develop on a clean break of 16, and with gold looking to have started a new leg lower this becomes an increasingly likely outcome,” he said in a recent report. “There may be a bounce or two along the way, but barring an extremely sharp turnaround, those should be short-lived.”

The selloff in silver comes as two major banks have turned bullish on the grey metal. TD Securities and Bank of Montreal, both recently said that they see silver hitting $20 an ounce in 2018.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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