IGI Securities Limited – Commodity News

Karachi, January 05, 2018 (PPI-OT): Silver

Technical

Silver markets initially fell towards the $17 level during the trading session on Thursday, but found buyers in that area to rally significantly, towards the top of the overall consolidation. I believe that the $17.25 level above is the top of the overall attitude of the market right now, so if we were to break above there, it’s likely that we would go much higher, perhaps the $17.50 level. Today, the employment figures coming out of the United States, for the month of December. This has a massive effect on the greenback, and that of course will have an effect in the precious metals markets. I believe that the markets are eventually going to find reason enough to go higher, but today could be a bit volatile. Dips are buying opportunities, unless of course we were to break down below the $16.80 handle underneath. I believe longer-term we are getting ready to reach towards the $18 level.

Highlights

Spot silver was down 0.4 percent at $17.17, after touching its highest in over six weeks at $17.27 in the previous session

The dollar index against a basket of six major currencies is poised for a loss of 0.2 percent this week

U.S private employers added 250,000 jobs in December, data from ADP showed

Economists surveyed by Reuters had forecast a gain of 190,000 jobs

Friday’s U.S. non-farm payrolls report is expected to show job gains of 190,000 for December

Fundamentals

Silver prices are traded moderately lower in U.S trading yesterday. The profit- taking pressure seen in the precious metals is not unexpected as gold hit a 3.5-month high Wednesday, while silver prices scored a five-week high. February Comex gold was last down $5.00 an ounce at $1,313.40. March Comex silver was last down $0.107 at $17.16 an ounce.

The just-released ADP national employment report for December showed a rise of 250,000, which was significantly higher than the increase of 195,000 that was expected. Gold and silver prices down-ticked on the news.

Traders and investors are looking ahead to today’s U.S. employment report from the Labour Department. This report is arguably the most important U.S. data point of the month. The key December non-farm payrolls number is forecast to come in at up 180,000.

World stock markets were mostly firmer overnight. There was some upbeat economic data from China released yesterday, to help boost world equity markets. U.S. stock indexes are pointed toward higher openings when the New York day session begins. The U.S. indexes hit new record highs overnight. The rallying world stock markets are a bearish element for the competing asset class of precious metals.

Gold and silver prices sold off Wednesday, right after the release of the minutes of the last Federal Open Market Committee (FOMC) meeting held on Dec. 12- 13 saw the marketplace deem the minutes as favouring the hawkish camp on U.S monetary policy. The FOMC members are still seeking a gradual rise in U.S interest rates, with some members saying the new U.S tax policy could raise GDP.

Tensions in Iran are still not far from the front burner of the market place. This matter is supporting some safe-haven gold and silver markets, as well as boosting the crude oil market.

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