Spot Silver Price Chart - Daily Silver Prices 22nd June 2009

Spot Silver Price Chart - Daily Silver Prices 22nd June 2009

With equity markets at pivotal levels as investor sentiment appears to be turning bearish, spot silver prices have reacted in kind by falling slightly as a result of its dual persona as a precious metal and use in industrial processes.  Like many other markets silver prices consolidated last week awaiting the inevitably catalyst that will spark a significant move and a possible longer term change in investor sentiment, and indeed we may see this later during the week following the FMOC statement which may give a clue to the future direction of the markets.  From a technical perspective both gold and silver are in a similar position with Friday’s close finishing marginally below the 40 day moving average suggesting a bearish tone at present with both the 9 and the 14 day moving averages pointing lower.  Indeed this view has been confirmed to some extent in early European trading this morning as the open was gapped down from Friday’s close.  However, several points need to be borne in mind before jumping to any longer term conclusion.  First, and from a technical point of view, there is a strong degree of support in place in the $13.75-$13.95 price region and should this hold then we could see a short term reversal back higher once again, but this would need a break and hold above $14.50 coupled with support from the moving averages for it to have any meaning.   From a fundamental perspective the future direction for many commodities will be largely dictated by investor appetite for risk, and with equity markets now increasingly looking fragile and with a sense of fear and uncertainty increasingly, coupled with reduced risk appetite, this may well be a positive signal for both gold and silver bulls in the medium term.  The general view is that equity markets have risen on optimism not fact and we could see an abrupt correction in the next few days.

The short term trend is bearish, the medium term trend is sideways while the long term trend is bullish.

Support:    $14.120 (Friday’s low)                                      Resistance: $14.830 (high of 22/05/09)

Support:    $13.930 (low of 17/06/09)                                   Resistance: $14.550 (high of 21/05/09)

Support:    $13.830 (low of 12/05/09)                                   Resistance: $14.380 (Friday’s high)