Silver Prices: A Low May Be Forming, Watch $14.58

Silver prices remain bearish below yesterday’s high of $14.58, and may reach yesterday’s low at $14.29 as long as the trend remains bearish. On a break of $14.29 we may reach the August 27th low of $14.15 (see chart below).

Factors influencing silver prices are the ever-increasing U.S. Dollar and last night’s soft Chinese industrial production numbers. Focusing on the first factor, we remain long term Dollar bulls, but in the short term the Dollar has gained a great deal and we note that U.S. yields are easing back slightly from their highs.

Looking at the soft Chinese industrial production published overnight it is clearly bearish as the YoY reading of 5.6% is the same levels seen in March this year. According to my own estimations this implies a GDP YoY growth of 6.26%. However, the latest Chinese Caixin PMI bounced from 47.2 to 48.3, hence the market may be looking beyond the near term slowdown of industrial production. Stock markets have ignored the Chinese data.

Overall we note that Silver, Gold, and Copper prices refuse to trade lower on the soft Chinese data and this is probably on the back of these assets being oversold.

A break of the $14.58 will probably mark a short-term low in silver prices.