Silver remains a very noisy place to trade at the moment, as the world continues to throw headlines at traders.
Silver
Silver continues to be very noisy as we hang around the $80 level, an area that of course has been important for some time and I think this is probably going to be the battlefield if you will in the short term as I believe traders continue to look at this market as one that will be driven by interest rates in the United States and whether or not they are rising or falling.
Typically speaking, a rising interest rate environment is very toxic for silver, and it does cause some issues. With this, I believe that we will watch the 10-year yield more than anything else and as long as we can stay below 4.30% it gives silver a reasonable chance to continue to the upside.
Interest Rate Sensitivity and Technical Targets
If we break to the upside, the $90 level is my next big target, although I see some noise right around $83 that could cause a little bit of hesitation. I wouldn't look for anything major here; I think this is a market that's a little bit exhausted and probably trying to come to terms with everything that may or may not be happening in the Middle East.
It does look like there's probably going to be some type of continuation of peace talks and that of course is good; it drives yields down; it makes silver a little bit more valuable. Furthermore, we need to keep in mind that silver is very volatile, so you need to keep an eye on your position size but quite frankly this is a market that I want to look at pullbacks as a potential buying opportunity.
I have no interest in shorting it as things stand now. That of course could change quite quickly, but ultimately that is just going to be based on the latest headlines and with that you just don't know going into it. All you can do is protect yourself with reasonable trading position sizes. If we were to break down below $74 then maybe that's an issue.