The strengthening U.S. dollar and greater likelihood of a Federal Reserve interest rate hike are tarnishing silver bullion-related exchange traded funds, with the precious metal trading at a six-year low.
The iShares Silver Trust (NYSEArca: SLV) dipped 0.7% Wednesday and was trading near its lowest level since June 2009. SLV declined 9.0% over the past month and fell 8.6% year-to-date.
Comex silver futures dropped 0.6% Wednesday to $14.3 per ounce, nearing its $14 per ounce August 2009 low.
Silver has has experienced back-to-back selling since the October Federal Open Market Committee announcement, which pointed to a December rate hike, and the strong October jobs report, which also fueled the case for tighter monetary policies.
Technical investors, though, may argue that silver could bounce back over the short-term as the relative strength index, a technical momentum indicator, suggests that SLV is oversold after the consecutive selling pressure.
However, looking farther out, Bank of America Merrill Lynch commodity analysts reveal that their models indicate silver could fall to as low as $12 “in the coming weeks,” reports Jamie Chisholm for the Financial Times.
Weighing on the silver outlook, the looming Fed rate hike and stronger dollar will hurt precious metals.