IGI Securities Limited – Commodity News

Karachi, December 20, 2017 (PPI-OT): Silver

Technical

Silver markets rallied a bit during the trading session on Tuesday, but then rolled over as it looks like we are ready to continue the nauseating volatility. The market looks likely to test the $16 level today, and the question now remains whether we can stay above there. I think Silver markets are trying to build some type of base at this point, to go much higher. Ultimately, I think that the markets will go higher given enough time, but I think also that the market will be choppy. After all, this is the holiday season in liquidity will be an issue. I think that the US dollar will have its influence as per usual, but at this point I suspect that it’s probably a “buy on the dips” type of scenario. I believe that longer-term, the Silver markets are trying to build a base that we can launch from. It’s not until we break down below the $15.75 level that I would consider selling.

Highlights

Silver was little changed in yesterday’s trading session amid a steady dollar

Investors are considering the potential impact of a sweeping tax legislation in the United States

Upbeat U.S housing data and the House’s approval of the tax overhaul boosted U.S Treasury yields.

All we see is a bit of book positioning in anticipation of adjusting their positions for the next 2-3 weeks ahead

Silver was up 0.1 percent at $16.13 an ounce, after touching a two-week high

Fundamentals

Silver prices were ending the U.S day session modestly lower yesterday, on downside corrections and chart consolidation after their recent rallies. The U.S Dollar index had also recovered some of its earlier losses in midday trading, which was a mildly bearish element for the precious metals markets.

February Comex gold was last down $2.40 an ounce at $1,263.00. March Comex silver was last down $0.09 at $16.115 an ounce. U.S. economic data released yesterday saw new residential construction numbers for November come in very upbeat, with housing starts up 3.3% from October. That helped to pressure safe-haven assets such as gold, silver and U.S. Treasuries.

U.S. stock indexes were under mild selling pressure at midday on profit taking from Monday’s record highs. There is growing optimism in the world marketplace that the U.S. Congress will pass tax-reform legislation, as soon as this week, which would likely to spur better U.S. economic growth.

The “risk-on” trading/investing attitudes in the world marketplace at present are still limiting the upside for the safe-haven gold and silver markets. Look for trading volumes to begin to dwindle as the trading week progresses ahead of the Christmas holiday weekend.

Investment strategist Ivan Martchev, in a commentary for Market Watch, is extending a bearish call for gold and silver into 2018. He thinks the metal could decline below $1,000 an ounce at any point in 2018.

March silver gained 0.9% to settle at $16.21 an ounce after tacking on 1.5% last week. March copper rose 0.4% to $3.15 a pound after a weekly climb of 5.2%.

Meanwhile, the dollar was supported after the House of Representatives on Tuesday approved the proposed U.S. tax overhaul, though Congressional Republicans will likely need to hold another vote later due to procedural issues.

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