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Silver futures – 15th November 2010

silver futures daily chart

A volatile week for silver futures last week, which saw the December contract fall sharply on Friday and end the day with a wide spread down candle following the strong gains of Tuesday, as we watched the metal break the $29.00 per ounce price point, before closing marginally lower. The week ended with the December contract trading at $25.84 per ounce, well below the high, but still retaining the long term bullish sentiment for the metal, with the low of the day finding support from the 14 day moving average in the $25.63 price region. The 40 day moving average continues to point firmly higher for the commodity, and provided this remains unbroken in the next few days, then we can expect to see silver futures pick up the bullish sentiment once more and continue higher in the longer term.

Throughout the last few months, silver has benefited from the spillover effect for gold, which has continued to climb ever higher, fuelled in the last few days by talk of a return to the gold standard, which whilst unlikely, has certainly injected further momentum in the recent long term trend. As such the sentiment for gold looks set to continue in a positive vein, and provided the recent dollar strength reverses this week, with a consequent rise in equities, then we can expect to see commodities in general and silver in particular benefit as a result and help to extend the bullish trend further.

For this week, we need to see a break and hold back above the $28 per ounce level, and provided this is achieved, then we should see silver continue higher once again, and with the deep and sustained platform of support below in the $25 per ounce level, then the outlook remains firmly bullish with the current pull back seen as a solid buying opportunity.