Silver received a boost last Friday, gaining $0.45 for the day and closing at $27.35, following the release of a disappointing US employment report. Although the metal started the week by losing a nickel, it more than recovered on Tuesday, when silver prices jumped $0.68 for the day, finishing two cents shy of the $28 mark.
Tuesday's gains were the largest since January, according to Bloomberg. The move was largely attributed to short covering, bargain hunting and expectations that major central banks will continue to employ policies considered bullish for precious metals.
Wednesday's release of Federal Open Market Committee meeting minutes doused these expectations. The document reveals that debate continues within the Fed regarding how long current monetary policies should continue. Discussions about the potential risks associated with these measures are also ongoing.Also in the US, on Wednesday, both the Dow (INDEXDJX: .DJI) and S&P 500 (INDEXSP: .INX) hit record highs, putting further pressure on silver. Added to the mix was the gold market's negative response to reports that Cyprus plans to sell 400 million euros worth of its gold reserves. Silver followed the yellow metal's decline and finished the day with $0.33 in losses, ending at $27.65. Thursday, the Cypriot central bank denied the claims that it plans to sell its gold, asserting that the matter has not even been discussed. Silver has managed to keep above $27 all week and even briefly breached the $28 mark during trading. But the futures market is still extremely heavy on the short side. Last week's Commitment of Traders report shows that there were further aggressive additions by speculative shorts. Short positions, which are at a five-year high, saw the addition of 635 metric tons. However, since Tuesday is the cut-off day for the reporting period, the market's response to March US employment data will be reflected in this week's report.