Silver Prices Face Downward Correction as Dollar Rally Mobilizes

New York (May 31)  Silver prices broke sharply lower Wednesday, as the dollar regained momentum ahead of high-profile jobs data.

July silver futures fell 12 cents, or 0.7%, to $17.31 a troy ounce at 7:30 a.m. ET. The futures price traded within a range of $17.22 and $17.39 overnight.

 Despite recent declines, silver remains in a firm uptrend following a series of higher highs over the past three weeks. Long-term, analysts say the metal is likely to run into pressure as markets continue to favor higher U.S. interest rates.

Silver’s retreat was preceded by gold, which fell 0.5% on Tuesday. Bullion was last seen trading at $1,266.50 an ounce, little change from the previous close.

The U.S. dollar has slowly regained its footing over the past week after a series of heavy losses. The greenback has also benefited from geopolitical risks in the United Kingdom and Eurozone, which has weakened their respective currencies.

The dollar index was last down 0.2% at 97.14.

U.S. economic data were generally favorable to start the week, with consumer spending matching income growth for the month of April. Core inflation weakened slightly, but not by enough to deter the Federal Reserve to scale back plans to normalize monetary policy.

Economic data could dictate the flow of trading in the latter half of the week. On Thursday, the ADP Research Institute will release private-sector payroll data for the month of May. Just 24 hours later, the Labor Department will issue its nonfarm payrolls report, which provides a more complete picture of the jobs market.

Source: EconomicCalendar