Silver reached its highest level in more than a week yesterday. The rebound was triggered mostly by the recent strength of the euro. The stronger currency refocused investors appetite towards the precious metal.
The white metal climbed above the $27.45 resistance level. Now it will very much likely test again the main previous low and resistance level at $27.90-28.00. The price deviations on Wednesday also tend to be bullish. However, a break above $28.00 should be carefully considered in respect of a descending resistance of a bearish wave. Yet, such resistance will mark the continuation of the upward trend.
On the Comex, silver futures for May delivery rose by 2.7% to trade at $27.881 per ounce. This was the biggest gain since 30th January.
A major driver for the silver price rebound is the $1.4 trillion Japanese stimulus plan. The widespread perception is that Bank of Japan’s monetary program will spark growing global currency war. The white metal price is expected to jump as nations struggle to counter the Japanese move. In nominal terms they would increase and extend their own stimulus to sustain the low price of their respective currencies, some analysts believe.
The euro hit a three-week high against the US dollar. That caused support to the silver market. The European money traded as high as $1.3101 against the greenback. Silver is priced in US dollars. Therefore, when the greenback weakens the metal turns less expensive for investors who hold non-dollar currencies.
In addition. investors tend to run to currency alternatives such as precious metals during periods of big shifts in the foreign-exchange markets.
Yesterday the silver ETF faced their highest daily outflow since September 2012. The exchange funds recorded an outflow of 175 tons of silver. Yet, silver ETF holdings of 19,489 tons are not far from the peak high they recorded in the middle of March. Analysts believe that prices tend to grow immune to such ETF outflows. Though, it is certain that the firm demand for physical silver is offsetting the weak ETF performance.
On Tuesday the sales of American Silver Eagle Coin also jumped by 61,500. This was a moderate increase right after the massive 833,000 sale recorded at the start of the week.
