Silver at $60: key levels to watch this week

Silver goes into the week at around $60.70 an ounce after a 2.8% gain on Friday, according to the Eastern Herald. The move came on the back of a weaker dollar and lower Treasury yields — and it leaves silver sitting right on a round number that traders have been watching for weeks.

What drove Friday’s move

Silver traded between $59.08 and $61.30 on Friday, the Eastern Herald reports. Three things lined up behind the rally:

• A weaker dollar. The dollar index fell to about 102. Silver, like gold, is priced in dollars, so a softer dollar tends to lift it.
• Lower yields. The 10-year Treasury yield eased from 5.35% to 5.23%, reducing the income investors give up by holding metal that pays none.
• A weak jobs report. It cut the market’s odds of an October Fed rate hike from about 70% to below 25%.

The levels on the chart

The Eastern Herald’s analysis, drawing on Kagels Trading, marks out the following levels. These are the publication’s, not ours, and they are reference points traders use, not predictions:

Support is a price where buyers have tended to step in before; resistance is one where sellers have. They are useful because many traders watch the same levels, which can make them self-reinforcing for a while — and less useful once a move is big enough to break through them.

How yields and the dollar link to silver

Silver behaves partly like gold — a monetary metal that competes with interest-bearing assets — and partly like an industrial commodity, used in solar panels and electronics. Friday was a monetary day: the move came almost entirely from the dollar and bond yields. That is why the US data this week matters so much. FXStreet reported earlier in the week that Treasury yields were near their highest since 2002, which we look at in Yields at a 24-year high.

The week’s tests

US consumer prices (CPI) are due on Wednesday 14 October and producer prices (PPI) on Thursday 15 October. The pattern of recent weeks is straightforward to describe, even if the outcome is not: hotter inflation has meant higher hike odds, higher yields and pressure on silver; softer inflation has meant the reverse. Which one the data delivers is not something we try to call.

For the bigger picture — whether silver’s deficit is turning into a surplus — read Is the silver deficit story over?. Silver against gold is tracked on our gold-to-silver ratio page.

Every figure here is as reported by the publications listed under Sources, at the time they reported it. Prices move; the live gold price has the current one. Nothing on this page is investment advice.