Silver Prices Are Approaching a Key Breakout Point
Peter KrauthA weakening dollar hasn't spurred silver prices like we expected, but the indicators I'm looking at show silver is nearing the tipping point it needs to surge higher.
Geopolitical concerns have eased in Italy and Spain, and the U.S.-North Korea summit appears to be on once again for next week.
That has diminished the attraction of silver's safe-haven properties in the near term, but with a FOMC meeting also next week, I think we could be approaching silver's next catalyst.
By all accounts, a rate hike is likely in the cards. At least, that's what the U.S. Federal Reserve has been telegraphing. That being the case, odds are it's been priced into the dollar already. Perhaps it will get another bump into the next Fed meeting, but the dollar's strength could fade.
And if things don't go smoothly between U.S. President Donald Trump and North Korean dictator Kim Jong Un, then all bets are off…
As for silver, we'll break down its recent price movement, and I'll show you the technical indicators I'm looking at that are forecasting higher silver prices after the next rate hike…
Why Silver Prices Didn't Rally as the Dollar Weakened
Even with some sizeable moves in between, the price of silver started out trading at $16.39 last Tuesday (May 29). And after the next five trading days ended at exactly the same price. I'll show you why – and why that's going to change soon…
On Wednesday (May 30), Fed officials reinforced expectations for a rate hike next week, saying the economic outlook justified another hike "soon." It also suggested that having inflation rise above 2% would be welcome.
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Reading between the lines, it appears the Fed doesn't plan to hike rates more than two more times this year, for a total of three hikes in 2018.
That same day, the U.S. Dollar Index (DXY) dialed back to 94.10 after flirting with 95 multiples times. That was enough to send silver to a close of $16.48.
Take a look at the dollar's plunge on Wednesday…
But on Thursday (May 31), silver reversed from a morning peak at $16.55, dropping to $16.39 on news of Trump's steel and aluminum import tariffs.
Plus, Friday's (June 1) strong jobs report helped push the DXY back to 94.25, weighing on silver even more. Silver closed the week at $16.38.
And Monday's (June 4) early dip in the DXY – down to 93.70 – powered silver to $16.51 at the open. But the DXY's return back above 94 dampened the silver bulls, and it closed back at $16.39.
While silver couldn't break out over the last week, I think there's some good news ahead. Let me show you the silver indicators I'm keying in on…