Silver facing first quarterly loss in 10 quarters

In the Lead: “Beijing to the dollar: Who [still] loves ya, baby?”

As the euro gained in the wake of the Greek lawmakers’ voting results, the US dollar gave up some ground and was still off by 0.10 this morning, trading near the 74.50 mark on the trade-weighted index. Following the dissipation of the mini-“europhoria” that we witnessed yesterday, the common currency began to drift a tad lower today but then again, so did the dollar.

The drift to lower levels in the greenback engendered small gains in WTI crude oil (up 30 cents to $95.07 per barrel) and boosted certain base metals a tad. Spot dealings in copper for example, were showing a 0.53% gain this morning as risk appetite made a modest return in the markets. As the week winds down, the appetite for anything beyond BBQ-flavored foods and the accompanying brews will prove much more difficult to ignite than your average pile of charcoal briquettes. The trade already appears to be looking for July 5 in terms of hoping for “real” market action.

This morning’s US Labor Department report showed that only 1,000 fewer claims were filed in the reporting week that ended June 25. The aggregate number came in at 428,000 and it was higher than the anticipated 420,000 claims that economists had projected to be filed on the period. On the other hand, continuing claims fell by 12,000 in the week that ended on June 18 but still underscored difficult progress levels in the American jobs scene.

Spot gold trading opened with a loss of $3.80 per ounce and the bid-side quote was indicated at $1,512.00 in New York. Silver fell 4 cents to start the Thursday session off at the $35.07 per ounce level. Gold and silver were seen correcting their recent slides with yesterday’s technical bounces but Elliott Wave analysis continues to expect larger-scale declines in the yellow and the white metal to resume soon and bring prices to significantly lower levels. As things stand right now, gold bullion appears set to conclude a second month of declines (1.5% in June and 1.8% in May) but will likely still notch a quarterly gain (its 11th).

Specifically, the EW team expects gold to possibly target value zones that extend from “well below $1400” to a possible $1,307.80 low. Silver could, in turn, be drawn to lows in the low $20s if the current wave pattern analysis turns out to be correct. Only a rise above the $37.90 level would negate the bearish stance in the market and allow for silver to rise toward $40+ in the process.

For the time being, the white metal remains in what EW labels a “stair-step decline” that has featured lower lows and lower highs since late in May. Silver bullion – by contrast to gold – will likely record a quarterly decline of a much larger order of magnitude (7%) and is heading for its first quarterly loss in ten. This divergence between the white and the yellow metal does not bode well, in the opinion of certain metals’ markets watchers.

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