IGI Securities Limited – Commodity News

Karachi, March 06, 2019 (PPI-OT): Silver

Technical

Silver markets had a slightly negative session as it continue to bounce around the $15.00 level. This is a market that will probably make a significant decision rather soon based upon this level. This is an area that was massive resistance previously, so there should be significant support here. If it break down below the $14.90 level, then it could break down rather significantly to the $14.50 level. If the dollar starts to fall apart, then silver could rally from here. Otherwise, if the US dollar strengthens significantly, that might be reason enough for Silver to fall apart and go looking towards the $14.50 level, maybe even the $14.00 level. There are a world of headwinds out there in both directions, as the global growth situation is a bit convoluted, it has the US/China trade situation, and of course a Federal Reserve that seems to be stepping away from a hawkish position.

Highlights

Silver fell 4.4% over the past week, the third weekly loss in a month, driven by the rise of US dollar

Spot silver lost 0.3 percent to $15.08 per ounce, after slipping to its lowest since Dec. 27 in the previous session

Silver, increasing its forecast for the precious metal in its latest commodities report

May Comex silver was last steady at $15.11 an ounce

The silver market is defying gold’s weakness with the precious metal modestly up on the day

Fundamentals

Silver prices stabilized in today’s trading, despite gold dropping for its seventh consecutive session and the rise of the dollar against most of the major currencies, and concerns about the Chinese economy annual growth.

China announced today that it is targeting an economic growth of 6.0% to 6.5% in 2019, down from the 2018 growth rate of 6.6%. As a result, Beijing has confirmed its intention to raise incentives to support economic growth, including reducing Tax incidence on major businesses.

Meanwhile, The Dollar against a number of major currencies rose by 0.3% to 96.8 points, with a high of 97.01 points and a low of 96.6 points. Silver futures May’s delivery settled at to $15.105 an ounce, which is the same as last session close, and a high of $15.175 and a low of $15.06.

The safe-haven metals bulls are trying to stabilize prices after their recent downdrafts that produced some near-term technical damage. Silver markets are technically oversold on a short-term basis and due for corrective bounces.

Investor risk appetites in recent weeks are keeping silver buyers scarcer. As long as world stock markets remain in near-term price uptrends it will be difficult for silver markets to sustain rallies.

Higher rates can lead to more financial-market volatility and recession fears, boosting safe-haven demand for silver, while a rate cut boosts silver demand as it lowers opportunity cost of holding silver. At the same time, a high gold/silver price ratio should help incentivize investors to diversify some of their gold holdings into silver.

You May Also Like