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Silver Prices Could Keep Rising

Silver may trade higher this week on bullish momentum indicators and an anticipated decline in the dollar index.

NEW YORK (TheStreet) -- Silver may continue trading higher this week on bullish momentum indicators and an expected downslide in the dollar index. The dollar may drop on declining new home sales and durable goods orders.

Technical analysis suggests that silver is expected to trade higher this week. Silver futures for July delivery on the New York Mercantile Exchange traded in the range of $18.20 to $19.28 an ounce and finally settled at $19.18 an ounce. The silver market breached crucial resistance at $18.68 and will likely trade higher this week.

Silver prices

are trading above 13, 22, and 45 EMA daily indicating a bullish view. The momentum indicator, RSI (14) daily, has ascended from 0.38 to 0.60 implying a potential northward momentum.

Data releases this week will likely lower the dollar Index to support higher silver prices. Despite the uptrend in existing home sales, new home sales and durable goods are lagging. The

Federal Reserve's

rate decision is due this week and is likely to remain unchanged at 0.25%, however, the Fed's statements regarding the overall economy may move silver prices.

Over the past week, silver July futures on Nymex gained 5.23% outperforming gold's 2.28% increase. The gold-silver ratio dropped to 65.59 from 67.48 as silver rose more than gold. Being a smaller market,

the white metal tends to outperform the yellow metal

on a percentage basis during the later stages of an economic slowdown. Gains in the euro over the past week indicate signs of easing debt concerns. Downgrade of Greece's debt rating to "junk" status did not have a negative impact as bonds were already trading at "junk" levels. Silver is anticipated to outperform gold this week as well.

Video: Miner Bets on Silver >>

Base metals closed almost unchanged last week, as the initial rise was offset by profit-booking in the later sessions. The benchmark MSCI World Index for stocks was up 3.21% past week.

iShares Silver Trust

(SLV) - Get iShares Silver Trust Report

maintained its holdings at 9208.83 tons last week.

Silver prices for spot delivery on the Comex closed at $19.18 an ounce, while futures ended at the same level. In contrast, gold prices for spot delivery on Comex closed at $1256.8 an ounce, while futures ended at $1258.3 an ounce, implying that gold prices are in contango.

Calendar spread, the difference between the two future contracts, between silver Jul'10 and Sep'10 continued to remain thin at -0.047, suggesting that far month contracts closed higher than the near-month contract. Meanwhile, calendar spread between gold Aug'10 and Oct'10 contracts closed at -2.00 during the last week.

All major silver stocks gained last week on the upward momentum in silver prices.

Coeur d'Alene Mines

(CDE) - Get Coeur Mining, Inc. Report


Hecla Mining

TheStreet Recommends

(HL) - Get Hecla Mining Company Report

led the pack gaining 14.4% and 10.9%, respectively.

Pan American Silver

(PAAS) - Get Pan American Silver Corp. Report


Silver Wheaton


were up 9.5% and 8.2%, respectively.

Other producers,

Silver Standard Resources



Endeavour Silver

(EXK) - Get Endeavour Silver Corp. Report


Mag Silver


, and

Compania de Minas Buenaventura

(BVN) - Get Compania de Minas Buenaventura SAA Sponsored ADR Report

advanced 4.8%, 4.6%, 3.8% and 2.7%, respectively.

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