Silver continues to look very weak, as we cannot hold gains for long. The CPI numbers were the latest release backing up the idea of a tight Federal Reserve.
Silver
The silver market had initially gapped higher to kick off the trading session here on Tuesday but gave back gains as it looks like real rates continue to be a major problem and the 10-year nominal yield is heading toward the 5% level again.
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Rates in America are climbing after the CPI numbers came out hotter than anticipated, suggesting that traders are going to have to expect the Federal Reserve will remain tight. The market, I think, had already anticipated interest rate hikes in December, but now it looks like there is even more pressure.
That being said, with real rates paying you to hold government debt, most traders do not like silver. There is an industrial component that is starting to get a little bit better, but not enough to overcome the financial problems that silver faces.
From a technical analysis standpoint, the $55 level above is a major barrier.
It was major support; now it looks like it is major resistance. I do think silver probably has further downward pressure to come. Really, at this point in time, I am not keen to buy it other than maybe physical silver for a longer-term buy-and-hold type of investment.
As far as leveraged positions are concerned, it just does not show enough momentum to get me excited. I think, ultimately, signs of exhaustion get sold into.
The question now is whether we reach toward the $50 level and then, after that, $45, which is a significant support level on the longer-term charts. As things stand right now, I suspect this is a market that you continue to fade on short-term charts every time it rallies, at least until we break above $56 at the bare minimum.
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