Silver Erased Its Gains from December 16



Technical indicators

On December 17, 2015, silver futures for March expiry fell by 3.8%. It erased the gains from the day before. Silver rose by about 3.5% on Wednesday, December 16—the day that the Fed gave its verdict on the interest rate. It raised the interest rate by 0.25%. Silver fell about $0.55 and closed at $13.7 per ounce. Silver futures touched a low of $13.66 per ounce. The fall in silver bought the RSI (Relative Strength Index) to 35. It was 45 the day before. This brings its closer to a reversion level. Figures closer to 30 indicate that an asset is undervalued.

Silver is trading at an 8% discount to its 100-day moving average price. The technical indicators suggest a possible rebound in the price. However, the market sentiment indicates otherwise.

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The rising US dollar pressured most of the commodities on Thursday including precious metals. The US dollar rose to a three-week high on Thursday. The fall in silver impacted silver-based funds like the iShares Silver Trust (SLV) and the ProShares Ultra Silver (AGQ). These two funds fell by 3% and 6.2%, respectively, on Thursday. These two indicators fell by 13.2% and 29.9%, respectively, on a YTD (year-to-date) basis.

Silver-based mining companies like Silver Wheaton (SLW), Pan American Silver (PAAS), and Coeur Mining (CDE) fell by 7.2%, 8.6%, and 9.1%, respectively, on Thursday. Together, they account for ~7% of the price changes in the VanEck Vectors Gold Miners ETF (GDX).


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