Silver Suffers Large Fall

It is very rare for silver to be in the spotlight in the commodities market but when the instrument drops close to $2 in a matter of minutes, it is definitely something that we have to sit up and take notice. Silver is always considered as the poor cousin of gold and it tends to follow the gold prices and that is one of the reasons why the traders and the investors do not give it too much respect. The liquidity is very low when compared to gold and the investors and traders believe that it is very easy to trade it as it just follows the gold prices and some specific ratios. But from time to time, silver does remind us that it has a mind of its own and this morning was one such time.

Silver In Spotlight for a Change

The instrument dropped hard in times of very low liquidity and still the traders are scrambling to find out what caused the fall. There does not seem to be any apparent reason for the fall but considering the fact that a large part of silver trading is carried on by the retail market, it doesnt take much to move the silver prices this way and that in a jiffy. Though the prices have almost fully recovered since then, the bearishness in this instrument is very clear for everyone to see and with the prices still sitting below $16, we believe that the downtrend is still intact in this pair in the short term. The bulls would want to help the price close above $16 for this week, for them to have any chance and they would be hoping for a weak NFP to achieve the same.

Gold prices are also under pressure as of this morning but so far, the support region around 1220 has been able to hold the price. The gold prices are likely to come under more pressure as the day wears on but the key would be the NFP that is scheduled to be released later in the day. If a strong report comes in, then we could see the gold prices finally break through the support region at 1220 and then we should be looking at much lower prices for gold in the short term.

Oil prices have dropped back to the strong support region around $45 on supply concerns and though the oil prices look weak in the short term, we believe that the bulls would continue to hold out and we still believe that the oil prices are likely to move up in the short term.