NEW YORK ( TheStreet) -- Silver could remain volatile this week, with a mild correction early in the week on technical indicators. Later in the week, silver could trade higher on anticipated negative economic data from the U.S. and Europe.
Last week, prices breached support levels at $17.85 an ounce. The momentum indicator RSI (14) is trending at 0.463 indicating a further fall in prices. Silver is trading above exponential moving averages and has a support level at $17.65. Overall, silver is anticipated to see a mild correction early this week.
Last week, silver followed gold and base metals lower. Silver Sep'10 futures traded in the range of $17.73-$18.54 an ounce on COMEX, closing the week at $17.79 an ounce. The London Metal Exchange Index for base metals declined more than 3% last week. The gold-silver ratio dropped to 66.80 from 66.94, as silver declined less than gold. Gold was down 1.8% last week, compared with silver's 1.6% decline.
Silver prices for spot delivery on COMEX closed at $17.85 an ounce, while futures ended at $17.79 an ounce, suggesting that silver prices are in backwardation. Similarly, gold prices for spot delivery on COMEX closed at $1,193 an ounce, while futures ended at $1,188 an ounce, suggesting that gold prices are in backwardation as well.Calendar spread, the difference between the two future contracts, between silver Sep'10 and Dec'10 continued to remain thin at -0.059 suggesting that far-month contracts closed higher than the near-month contract. Meanwhile, calendar spread between gold Aug'10 and Oct'10 contracts closed last week at -1.90. All major silver stocks declined last week on the downward momentum in silver commodity prices. Endeavour Silver (EXK), Coeur d'Alene Mines (CDE), Hecla Mining (HL), and Mag Silver (MVG) declined 8.1%, 8.1%, 7.3% and 3.7%, respectively. Our silver stock picks for the past few months, Silver Wheaton (SLW) and Pan American Silver (PAAS), were down 3.7% and 3.5%, respectively.
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