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Silver Prices Fall to Six-Year Lows; Market Looks ‘Horrible’ – Analysts

(Kitco News) - The adjective analysts and traders are using to describe the price action in silver Wednesday morning is “horrible,” as the market hit new six-year lows.

The selloff in silver picked up steam late Wednesday morning with September silver futures dropping below $14 an ounce, hitting an intra-day low at $13.910 an ounce.

Silver is the worst performing commodity among the entire metals complex, down more than 3.7% on the day, compared with a 1.4% decline in gold prices, a 2.7% drop in copper prices and platinum prices, which are up 0.4% on the day.

September silver futures last traded at $14.070, down 54 cents on the day.

“The chart is really ugly. While prices don’t move in a straight line, I don’t think we have seen an end to lower silver prices,” said Chris Beauchamp, senior market strategist at IG Markets.

Beauchamp added the technical chart does not bode well for the grey metal as prices have pushed below their 200-month moving average, the first time this has happened since 2004.

Jim Wyckoff, senior technical analyst at, agreed that silver prices could continue to head lower as the market has suffered some “serious chart damage.” Wyckoff added that his next support target for silver is around $13 an ounce.

Although silver has precious metals qualities, analysts said that its use as an industrial metal is currently driving the price action.

“Aluminum, copper and oil have all fallen to six-year lows, so this move in silver is not surprising,” said Wyckoff. “As long as copper and oil continue to struggle, silver will remain weak.”

Even positive economic U.S. data is not helping silver or commodity prices in general. Earlier Wednesday morning, the U.S. Department of Commerce reported a surprise rise in July’s durable goods data. The report said that manufactured goods increased by 2%, last month beating expectations of a 0.4% decline.

Phillip Streible, senior market strategist at RJOFutures, explained that although the U.S. data was positive, all the focus right now is on China’s weak economy.

“The U.S. durable goods data was from last month and I think there is concern that with China’s slowing economy, demand for raw commodities like silver and copper will be slower going forward,” he said. “There is just nothing to prop up silver right now.”

Beauchamp agreed that China is playing a major role in silver’s slide; however, he added that a strong U.S. dollar is also impacting commodity prices.

“The data shows that the U.S. economy is one investors can rely on, which is why you are seeing equity markets and the U.S. dollar higher today, which is dragging down commodities across the board,” he said.

Silver still has one saving grace: gold.

Wyckoff explained that if equities start to selloff again and fear sentiment starts to creep back into the marketplace, gold should start to rally and that will support the silver market.

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By Neils Christensen of Kitco News;
Follow me on Twitter @neils_C



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 precious metal products, 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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