May silver is trading $18.245 up about 22 cents on the day. Post Fed minutes dollar weakness is giving the metals, especially silver, a much needed lift. It appears that silver is slowly climbing up as the dollar continues to correct. In the last FuturesCast, I mentioned that the March contract should post a gain towards its 50% retracement from from the high of 2016. In my view, so far at least, weakness in silver will be seen as nothing more than an opportunity to participate in the long side. I have attached a May monthly chart on silver with a potential upside target into the $19.00 area.
The current US administration can’t seem to figure out whether it wants a weak or strong dollar. That in itself would probably make silver very attractive without considering all the other supporting factors. So far, as the stock market is concerned, even the Fed seems to think that the current lofty levels of the equity market are slightly over cooked. My suspicion is that silver will be viewed as a hedge to stabilize portfolios against a potential correction in the equity market. Broader view suggests that silver will have more room to the upside. At this point, traders should pay close attention to inflation data points like CPI and manufacturing indexes to support further gain.
Again, from technical prospective, silver futures should continue advance into the $19.00 level at least. Any pull back would more likely be seen as an opportunity on the long side rather than short. Per chart below, silver would likely head to the 50% retracement. If it manages to continue to close above $18.00 in near term, it would likely make $19.00 a near term target. As I stated before, continued turbulence out of Asia warrants monitoring the geo-political concerns that may arise over the South China Sea.