IGI Securities Limited – Commodity News

Karachi, January 08, 2019 (PPI-OT): Silver

Technical

Silver markets roll over a bit as it approached the crucial $16 level. The $16 level is of course a psychologically important level, as a structural level that should be paid attention to. However, the market has certainly broken out to the upside with real strength, so the buyers will be waiting for opportunities underneath based upon “cheap silver.” The $15 level underneath is massive support, just as the 20 day EMA is. Alternately, if it can break above the $16 level, that would be a very bullish sign and could send this market looking towards the $17 level above which is the top of major consolidation. However, the greenback will have its say and if the greenback can strengthen a bit in the short term, that could probably push silver lower. If it break down below the $15 level, that would be a very negative sign and could send this market down to the $14.50 level.

Highlights

Silver prices edged 0.1 percent lower to $15.63 per ounce

Silver have been under pressure due to investor’s appetite for risk returning

Silver prices saw a strong fall in the MCX on reduced orders from industrial units and coin makers at the spot market

Silver sales in December were down 21 percent from the previous month, and hit their lowest since August 2018

March Comex silver was down $0.031 at $15.76 an ounce

Fundamentals

Silver futures fell off July 13 highs for another session as the dollar index retreated from June 2017 highs for the 11th session out of 17, following earlier data from the US while markets await the results of the ongoing US China trade talks in Beijing.

Silver futures due in March fell 0.16% to $15.76 an ounce off six-month highs, while the dollar index tumbled 0.55% to 95.65, marking October 22 lows.

The U.S government shutdown is into its third week now, but the matter is garnering less attention from the marketplace and is not a front-burner issue.

A lower U.S dollar index today also worked in favor of the precious metals market bulls.

Investor attitudes are generally upbeat to start the trading week, due in part to a strong U.S jobs report released last Friday. Federal Reserve Chairman Jerome Powell also made comments Friday that U.S inflation levels are not problematic and that the Fed will be flexible in its monetary policy, which also assuaged the marketplace.

Earlier US data showed the ISM services PMI receded to 57.6 in December from 60.7 in November, missing estimates of 59.6. The U.S and China are holding face-to-face trade talks in China starting today, amid optimism the world’s two largest economies will make progress on their major trade dispute.

Otherwise, US trade secretary Wilbur Ross noted how the US and China could reach a good settlement when it comes to direct trade, but the structure of trade issues and their execution may prove a more difficult process, noting how China is awakening to its economic dependence on US trade.