Variables to Watch to Forecast Silver’s July Prices

Wednesday, June 28, 2017

fine silver

With the month almost over, we can now zoom out and get a sense of where the precious metal’s trend has gone over a thirty-day period that included a Federal Reserve rate hike announcement. As one might expect, the price of silver declined overall for the month, though has shown signs of regaining on some of those losses as of late.

But how are we to make sense of these variables and figure out where silver might head in July? Is the absence of another Federal Reserve meeting like June’s going to be good for the precious metal? Let’s weigh the different variables that bear watching in the next few weeks.

Uncertain Geopolitical Headlines

Last year’s Brexit vote was a stunner to the markets that yielded high moves for previous metals like gold and silver. Although the controversial political headlines seem to have tapered off a bit over the last month, there is always one thing about these surprising headlines no analyst can count on: they’re unpredictable.

Silver’s lower price relative to gold makes it especially sensitive to these types of movements, which is why worldwide economic and political headlines will always bear watching. Are there any that particularly affect silver? Decisions like rate hikes are always important for precious metals including silver and gold, but with an absence of that potential in July, we may be looking at a far more stable month for the metal.

Connections with Gold

Silver and gold are connected in a unique way. Not only do they belong to the same asset class—precious metals—but they share a historic relationship dating back hundreds, even thousands of years. That makes silver uniquely “interested” in the price of gold, which is why even silver bugs will watch the price of gold to get a sense of where the less expensive metal might be heading.

DailyFX.com recently noted a move in gold which triggered analysis for silver in return. The conclusion for silver investors: you can’t watch just one precious metal in a vacuum. Because the precious metals are highly linked to the strength of the dollar, they’ll tend to move in harmony over the long term.

Watching for Silver Signs in the Coming Weeks

Which variables really matter for silver? There are a number of them that will be especially relevant in July. The most important of these, of course, is the U.S. dollar index, which bears repeating as perhaps the most important variable in the equation.

Investors will also want to watch silver demand, including industrial uses for silver. This is a trait unique to silver that can sometimes boost its price independent of gold. Investors anticipating a rise in this sort of demand might be able to see a boost in silver that they can’t read in the tea leaves surrounding gold.

While we can’t predict where silver will end up in July, one thing is clear: there is a good chance it will not look a lot like June, thanks to the unique events that shaped the previous month.

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.