IGI Securities Limited – Commodity News

Karachi, August 09, 2018 (PPI-OT): Silver

Technical

Silver markets continue to be very noisy. This is the more volatile of the two major precious metals, so it’s not a huge surprise but the one thing that it would say about the chart that it is roughly in the middle of the trading range. This always makes for difficult trading, not to mention the fact that it can be dangerous. Economists think at this point, it’s very likely that it will see a return to the $15.25 level, although it recognize that it will probably be extraordinarily noisy in the process. Market players think at this point, it probably comes down to the US dollar and whether it is strengthening or not. Silver is highly sensitive to the greenback, which has seen a bit of a resurgence due to global trade fears. The easiest trade is to simply look at the $15.25 level as support.

Highlights

Silver prices marked up 0.5 percent to $15.46 an ounce

World’s second-largest silver producer, reported a rise in second-quarter adjusted net earnings as silver output was steady but costs fell

Silver production during the quarter was roughly steady at around 6.29 million ounces, versus 6.3 million a year ago

September Comex silver was last up $0.027 at $15.405 an ounce

Silver price fell to $16.40 an ounce from $17.19 in the year-ago period

Fundamentals

Silver prices are near steady but have traded on both sides of unchanged in uninspired action yesterday. The precious metals investors are looking for a dose of new fundamental information to provide a spark to the markets.

Amid the lack of fresh metals-market-moving news recently, the path of least resistance for prices remains sideways to lower because the near-term technical postures for silver remain fully bearish.

Silver futures tilted higher in Asian trade as the dollar index traded mostly flat, following earlier data from China, the world’s largest metals consumer, and ahead of US inflation and labor data later today.

Silver futures due on September 15 climbed 0.15% to $15.46 an ounce, while the dollar index inched up 0.04% against a basket of main currencies to 95.13. US unemployment claims are expected to have increased by 2 thousand to 220 thousand in the week ending August 18.

Earlier Chinese data showed consumer prices rose 2.1% y/y in July, a four- month high, up from 1.9% in June, and beating estimates of 2.0%, while producer prices rose 4.6%, slowing down from 4.7% and beating estimates of 4.4%.

Markets await US producer prices data, expected to have slowed down in June to 0.2% from 0.3% in May, while core prices are also estimated with 0.2% rise, down from 0.3% in May.

The wildcard remains the current trade dispute between the US and China as tariffs begin to be initiated. The unknown effects of these actions will probably have a dramatic effect on the economic markets in the weeks and months ahead. If the Fed stays the course and initiates rate hikes based upon its current monetary policy than it could see further weakness in silver prices.