Silver Knocking On The Door Of 6 Year Low

 | Nov 18, 2015 05:00AM ET

Silver has been hammered lower over the past month as speculation mounts that the Fed will make a move on monetary policy in December. That has left silver knocking on the door of a six year low, so will it break through?

The selling in silver has been relentless. Since 29th October, silver has fallen on every single day bar none. That is 15 consecutive trading days in the red without any respite. The selling has come as the market sentiment swings bullish for the dollar on bets the Fed will raise interest rates at their December 15th Meeting. There have been a startling number of FOMC members speaking over the last few weeks, including Janet Yellen herself, and the rhetoric has been clear, the December meeting is a ‘live’ one and interest rates could begin to rise.

The market has put the chance of an interest rate rise at over 70%, with some surveys suggesting up to 90% of businesses tipping a rate rise. Yesterday’s US inflation figures will only serve to raise the chances of a rate hike. Core CPI remained steady at 0.2% m/m and is now sitting at 1.9% y/y. The steadiness of Core inflation will please the Fed, as will the annual figure being close to their 2% target.

Earlier this month we saw employment figures hit their strongest level in five years which has certainly given the Fed confidence. The unemployment rate fell to 5.0%, down from 5.1% the previous month. The Nonfarm employment change change figures were a big surprise as they lifted to 271k vs the market expectation of 183k. This saw the slide in silver accelerate to where we are now.