Silver Prices To Trade At $15.98 If The Correlation To Gold Holds

With the DAX 30 reaching a new monthly low this morning, silver prices may rally once again.

Technical Trend Is Bullish Above $14.90

Silver prices are consolidating after yesterday’s strong gains and traders will probably see a break to yesterday’s high of $14.49 as an opportunity to add to their bullish exposure. On a break to the high, silver may reach the October 9 low of 15.62. A move higher is also suggested given the correlation to gold prices, a simple linear regression analysis suggesting that silver is trading at a discount to gold, and should be trading at $15.98 on gold prices trading at or above $1192 dollar per ounce.

The alternative scenario is for silver to give back 50% of yesterday’s gains, taking price to the $15.19 to $15.30 range, and it is here that the risk/reward ratio favours long positions. For price to end its bullish momentum, it would need to break below yesterday’s low of $14.90, and in this scenario price may reach Friday’s low of $14.68.

German Industrial Production Declines And Adds To Bearish Sentiment

Adding to the bearish sentiment this morning is German Industrial Production declining by 2.2% YoY in December. This suggests that E.U. GDP may have dropped to 0.63% YoY from 1.6% YoY in the third quarter of 2015, thereby triggering a softer DAX 30, which is now down by nearly 30% since its high in April 2015.

Silver Prices | FXCM: XAG/USD