Trump Equals Volitlity

January 26, 2017 8:28AM CST

March Silver contract is trading $16.81, down 18 cents on the day. The ongoing theme is that the strength in the US dollar has put a tremendous amount of pressure on metal markets in general, and silver is no exception. Since December 2016, silver has been trying to build a base and post a formidable rally off the December $15.60 area lows. The recent weakness of the last 24 hours, in my view, is nothing but a pullback and consolidation price action. What I find interesting is that silver has been generally friendly to equities, but has recently been moving away from that positive correlation, even as the Dow Jones is posting over 20K.

It has been a very interesting afternoon, as Mexico's President Peña Nieto canceled his meeting with President Trump in their ongoing clash to make Mexico pay for the wall. In my view, this is but the beginning of a long list of US relations that will be tarnished by this administration.  President Trump’s comments and actions are a constant concern for the metals market, and until the honeymoon phase is over, should warrant higher volatility for silver.  Once his administration is able to pursue their plans of economic improvement, things may calm down.

From a technical perspective, silver futures should continue to pull back a bit. I look forward to reviewing the COT report this Friday to see Non-commercial and Non-reportable positions. As I stated in a previous RJO FuturesCast, traders need to monitor Fed language to see how aggressive they will be when tightening monitory policy, which could put a bit of pressure on silver.  Continued turbulence out of Asia warrants monitoring the Geo-political concerns that may arise over in the South China Sea.  It's clear that there are plenty of headlining events that could spark volatility in the silver market, and extra attention to global events should be a top priority.

Silver Daily

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