Silver Prices Edge Higher After Early-Week Volatility

New York (June 27)  Silver prices edged higher on Tuesday, as the market stabilized following a volatile start to the week.

Silver for September settlement climbed 5 cents, or 0.3%, to $16.68 a troy ounce at 7:24 a.m. ET. The futures prices fluctuated between $16.55 and $16.64 through the overnight session.

Short-sellers controlled the market on Monday, sending silver prices more than 1% lower in intraday trade. The grey metal is down more than 6% since over the past three weeks.

Gold prices also rebounded following a sharp selloff on Monday. The August futures contract was last seen trading at $1,251.70 a troy ounce, which represents a gain of $5.30, or 0.4%, from the previous close. Bullion fell 1% on Monday.

The gold/silver ratio used by investors to determine when to buy and sell precious metals closed at 75.26 on Monday. This effectively states that one ounce of gold is worth 75.26 ounces of silver.

The U.S. dollar index (DXY) declined sharply on Tuesday, as the euro rallied rallied on an upbeat assessment of the economy by European Central Bank (ECB) President Mario Draghi. The dollar index was last down 0.5% at 96.90.

Though tracking closely with gold, silver’s medium-term outlook may be influenced more by base metals than bullion. Around 70% of silver is mined as a byproduct of base metal extraction. As global infrastructure projects take center stage, demand for industrial metals is expected to increase. This could provide a long-term boost to silver prices.

Despite its recent slump, silver is up 4% this year. At its peak in April, the grey metal had returned nearly 16% for the year.

Source: EconomicCalendar