Silver Price: Is A Strong Dollar In The Way Of Growth?

Sunday, November 20, 2016

silver bar

Anyone interested in precious metals in the last days of 2016 has to contend with one very strong factor: i.e. the strength of the US dollar. As we’ve noted here many times, the US dollar-denominated status of precious metals like gold and silver means that a strong dollar tends to put downward pressure on the price of these metals. And now that the dollar is performing well against the pound and the euro, those investors who are interested in silver may have to wait until the next opportunity.

This leads to an important question: Is the strong dollar really what’s in the way for the price of silver?

A “Block” Of High Silver Prices?

EconomicCalendar.com recently noted that the strong dollar is, in its words, putting up a “block” of the recovery of the price of silver. In fact, the article calls the strong dollar the most notable feature of markets in recent weeks. In turn, this keeps strong downward pressure on the precious metals for reasons already noted.

Noting also that there were no major announcements in Federal Reserve chairperson Janet Yellin’s recent Congressional testimony and that all appearances suggest a rate hike may indeed be in the works, the strength of the US dollar appears to have some breathing room, as well. For those interested in the impact of the dollar on silver prices, it’s hard to see how much room this will leave for the precious metal.

Are Silver Prices Bottoming Out?

BullionDesk.com is not necessarily discouraged by all of this news. In fact, the site sees a “consolidation” of sorts happening with silver prices showing resistance after falling some 21% off of its highs in July. Noting that the strong dollar does seem to be “weighing on prices,” the site also expressed some interest in the fact that silver is not doing much better than gold prices after the US presidential election.

The sell-off in silver has been “severe” according to the site, but they’re waiting to see if bargain-hunters might provoke some resistance in the price of silver and push the prices back up. With the strong dollar looming over the precious metals market right now, any significant movement appears to be unlikely.

Gauging The Precious Metal Climate

Precious metals have seen highs and lows throughout 2016. Though it’s largely been a successful year in many regards, there appears to be potential that precious metals won’t move very far before yearend. What does this mean for silver prices? Silver prices haven’t outpaced gold prices in the slightest, which means that both are likely reeling from the effects of a strong US dollar.

The good news, however, is that this strong US dollar appears to be the primary cause for the dip in both precious metal prices. That means there may be more potential in the future. Those who enjoy investing with a strong US dollar and purchasing metals when they’re cheap are likely waiting patiently for an entry point to get back into the silver market.

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.

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