IGI Securities Limited – Commodity News

Karachi, March 07, 2019 (PPI-OT): Silver

Technical

Silver markets consolidated a bit yesterday, as it continue to see a lot of noise in general. This obviously is highly influenced with the US dollar, so if it start to see the US dollar soften a bit that should help silver overall. The alternate scenario of course is true as well. If the US dollar strengthens, that will be very negative for silver. The $15 was once major resistance, so it should now be supported. This was the scene of a lot of order flow into the market, and now it is finally retesting this resistance to see if it’s going to hold. At this point, the next couple of days should be crucial and give us an idea as to what happens over the next couple of weeks. If it bounce from here, then there is a really good chance that it is looking towards the $16.00 level again. However, if it break down below the $14.90 level, it’s likely that it will reach down towards the $14 handle again.

Highlights

Silver is a much better bargain, it has declined by more than 65% from its 2011 peak

Spot silver declined 0.3 percent to $15.07 per ounce, after hitting its lowest level since Dec. 27, at $15, earlier in the session

May Comex silver was last down $0.02 at $15.085 an ounce

Silver futures “Due May 15th” rose 0.20% to currently trade at $15.12 per ounce, with opening at $15.15 per ounce

An increasingly dovish U.S interest-rate policy will deliver a weaker dollar

Fundamentals

Silver failed to resume gains in the European market yesterday, which stopped temporarily yesterday, and again dropping under the pressure of the rise of the dollar against a basket of global currencies.

Silver prices fell 0.2% to trade at $15.08 an ounce from the opening level of $15.11 and a high of $15.15 with a low of $15.06. Silver prices rose 0.3%, the first gain in five days, ending the longest daily loss series since early February.

The dollar index rose 0.1% yesterday to continue its sixth consecutive day of gains, approaching the three-week high of 96.93 points recorded earlier in the day, reflecting the continued rise of the US currency against a basket of currencies.

The rising US currency, supported by positive economic data in the United States, and has boosted investor confidence in the path of growth of the world’s largest economy, which also raises the chances for the Fed to increase US interest rates at least once this year.

Earlier in the day, prices hit a three-month low of $15.04 per ounce under pressure from the strength of the US dollar. Still, investors are not moving into silver heavily yet, particularly since they do not anticipate a secular downturn in the stock market.

The precious metal rose sharply in the early part of 2019, climbing to a high of $16.22 an ounce on Feb. 20, its highest level since June. Since then, however, gold has come under pressure, pulling down silver with it.

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