Is the Silver Market Heating Up?

The silver market continued to heat up last week and thus closed a third straight week of gains. The latest FOMC meeting concluded with no significant changes to its policy but the overtone of the FOMC statement and Chair Yellen’s answers and statements in the press conference might have been enough to pull up silver close to $21 – its highest level since mid-March 2014. Will this recovery continue?

Last week, the price of silver increased by 6.6%. Moreover, other silver related assets also rallied last week: iShares Silver Trust (SLV), Pan American Silver (PAAS) and Silver Wheaton (SLW) rose by 5.8%, 7.2% and 10%, respectively.

In the recent FOMC meeting, the members decided, as expected, to taper QE3 again by $10 billion. But the main issue was the general tone of the FOMC statement, which was more dovish than in the previous one.

This year’s economic outlook for the GDP growth rate was revised down due to the weak first quarter results. This week, the final estimate of the GDP will be released. If the estimate were to be revised down again, this could positively impact bullion prices.

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