NEW YORK (TheStreet) -- Silver may continue trading higher this week on bullish momentum indicators and an expected downslide in the dollar index. The dollar may drop on declining new home sales and durable goods orders.
Technical analysis suggests that silver is expected to trade higher this week. Silver futures for July delivery on the New York Mercantile Exchange traded in the range of $18.20 to $19.28 an ounce and finally settled at $19.18 an ounce. The silver market breached crucial resistance at $18.68 and will likely trade higher this week. Silver prices are trading above 13, 22, and 45 EMA daily indicating a bullish view. The momentum indicator, RSI (14) daily, has ascended from 0.38 to 0.60 implying a potential northward momentum.
Data releases this week will likely lower the dollar Index to support higher silver prices. Despite the uptrend in existing home sales, new home sales and durable goods are lagging. The Federal Reserve's rate decision is due this week and is likely to remain unchanged at 0.25%, however, the Fed's statements regarding the overall economy may move silver prices.
Over the past week, silver July futures on Nymex gained 5.23% outperforming gold's 2.28% increase. The gold-silver ratio dropped to 65.59 from 67.48 as silver rose more than gold. Being a smaller market, the white metal tends to outperform the yellow metal on a percentage basis during the later stages of an economic slowdown. Gains in the euro over the past week indicate signs of easing debt concerns. Downgrade of Greece's debt rating to "junk" status did not have a negative impact as bonds were already trading at "junk" levels. Silver is anticipated to outperform gold this week as well.
Base metals closed almost unchanged last week, as the initial rise was offset by profit-booking in the later sessions. The benchmark MSCI World Index for stocks was up 3.21% past week. iShares Silver Trust (SLV) maintained its holdings at 9208.83 tons last week.
Silver prices for spot delivery on the Comex closed at $19.18 an ounce, while futures ended at the same level. In contrast, gold prices for spot delivery on Comex closed at $1256.8 an ounce, while futures ended at $1258.3 an ounce, implying that gold prices are in contango.
