Year End Technical Selling in Gold Also Sinks Silver

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Stronger than Anticipated US GDP Report Causes Precious Metal Pullback, Technical Selling in Gold Also Sinks Silver, Analyst Final Year Silver Price Predictions Call for Substantially Higher Silver Prices in 2013.

Year End Technical Selling in Gold Also Sinks SilverTo add insult to injury with seemingly no Santa Clause rally in site for the precious metals the week before Christmas, silver dropped another more than 7% from its spot market open on Monday, December 17th by the close of spot markets Friday, December 21st.

Once again, silver was not much to blame for the precipitous decline that was so steep in big brother gold that it caused gold to fall off the proverbial cliff and slide below its 200 Daily Moving Average mega support line.

Silver declined mightily this week because the US GDP report came out stronger than expected while the technical selling in gold, as it obliterated its 200 DMA, also crushed silver. Silver saw a greater recovery than gold by the end of the week as it closed back above the psychologically important $30 per ounce water mark and numerous commodities tracking investment banks released bullish price targets for silver in 2013.

Stronger than Anticipated US GDP Report Causes Precious Metal Pullback

Gold flushed through another three and a half month low by Thursday when the US GDP report came out stronger than analysts had expected. Silver also sold off aggressively after the 3.1% GDP growth figure hit the streets in place of the 2.8% read that the economy watchers had been anticipating.

While silver tends to act more as an industrial metal than does gold, it was not able to escape the gold related safe haven selling retreat in the wake of the positive economic tsunami this past week. Silver sell stops triggered off as silver broke below the powerful chart support found at $30.79. The news for the white metal only got worse from this point.

Technical Selling in Gold Also Sinks Silver

Once gold started to drop, it broke through its long defended 200 Daily Moving Average that came in around $1,661 per ounce. Gold began to tank pretty sharply at that point, as sell stops were hit to defend gold speculators from exactly this event.

Within minutes, the yellow metal was down in the $1,650’s and falling fast. Silver similarly flushed down the proverbial drain as gold dropped to the $1,630’s. The white metal even briefly lost its solid grip on the much vaunted $30 per ounce level for a while, reaching a spot market low of $29.57 at one point.

Silver Closes Spot Market Above Psychologically Important $30 Price Per Ounce

Silver could not be kept down through the end of the week though, even though it had made a bearish four month low by Thursday. Gold lost its hold on its 200 DMA and closed well below it, but silver pulled itself up by its bootstraps and rallied hard all the way back up to $30 per ounce, the psychologically critical level that it needed desperately to hold. When the spot markets closed Friday, silver sat proudly on the major support $30 per ounce mark.

Analyst Final Year Silver Price Predictions Call for Substantially Higher Silver Prices in 2013

Silver also received a major boost Friday from the entire cadre of investment bank analysts who follow the white metal prices. Seven major investment banks issued bullish price updates for silver in 2013. Barclays Capital proved to be the least bullish of the bunch with a call for silver to average $32.50 per ounce for the next year. They base this on investor interest that they believe will continue throughout next year, though they expect silver will be the most volatile of the metals complex at the same time.

BNP Paribas and Societe General are the French banks who came out with updated silver price predictions. BNP expects silver will average $39.05 per ounce for the year based on better economic growth trends and ongoing easy monetary policy. Societe General looks for a full year price of $34 per ounce in silver. They add that they expect it will touch $40 per ounce in the first three months of 2013 as a result of loose monetary policies and defense against fears of higher inflation.

Commerzbank and UBS are also strong on silver for 2013. Commerzbank calls for a $40 per ounce average silver price next year. They base this on the Silver Institute’s report that anticipates industrial demand will rise in the coming year. Swiss banking legend UBS sees silver prices averaging $36.80 per ounce in 2013. They believe that the white metal will outperform the precious metals complex against a backdrop of looser monetary policy from the Federal Reserve and other major central banks of the world.

American investment bank Morgan Stanley and Canadian TD Securities also predict silver will rise significantly. The house of Morgan says that silver will continue to outperform gold and average $35 per ounce this next year, and to reach as high as $44 per ounce in the last quarter. They like that it is a cheaply priced proxy for gold with more potential to run.

Morgan says that industrial demand will outstrip supply for at least 2013 and 2014. TD Securities anticipates an average silver price of $40.52 per ounce in 2013. They believe that silver prices will be encouraged by Europeans taking actions that finally resolve their sovereign debt crisis, by more central banks buying silver and gold, and by ongoing cheap and easy money printing that will be provided courtesy of all the world’s major central banks acting in concert.

Take Away On Silver Market Prices

Silver was kicked to the curb by gold’s calamitous near collapse this week. Still, you could not keep the good white metal down by the end of Friday. Silver responded to fully seven different bullish price prediction updates courtesy of the world’s major commodities complex investment banks. It thrust back above the critical $30 per ounce water mark and straddled it confidently to end the tumultuous week before Christmas on a holly, jolly note.

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