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IGI Securities Limited – Commodity News

Karachi, January 04, 2018 (PPI-OT): Silver

Technical

The Silver markets continue to be very volatile, but breaking above the $17 level was a very strong sign, and therefore I think that the market is ready to continue going higher. Perhaps we go to the $17.50 level above, which is resistance, and it could take a while to get above. A break above that level should send this market to the $18 handle, but it is going to take a certain amount of momentum building to get there. I think that adding to the market going higher, and smaller positions. I think that the larger core position being attitude can continue to add profit to a market that looks likely to reach towards the top of the overall consolidation area which extends to the previously mentioned $18 handle. A break above there should send this market free to the $20 handle longer term. I think that if we were to break down below the $16.90 level, the market could drop towards the $16.50 level.

Highlights

Silver prices pulled down as investors took profits and as the U.S dollar firmed

Minutes from the Federal Reserve’s December policy bolstered expectations for more U.S interest rate hikes

People are looking to lock in some gains after a pretty strong rally over the past weeks

Geopolitical issues have certainly been a huge power point of the gold and silver rally into the year-end

U.S factory activity increased more than expected in December

Fundamentals

Silver made slight gains and hit a five-week high a day before yesterday. A slumping U.S dollar index that hit a better-than-three-month low today is a bullish element for the precious metals. Gold and silver markets also saw safe- haven demand come from heightened geopolitical risks. March Comex silver was last up $0.07 at $17.21 an ounce.

A feature in the marketplace early this week are rising tensions in Iran as demonstrators in that country are demanding an overthrow of the ruling government. There has been a violent crackdown on the demonstrators by the Iranian government.

U.S. President Donald Trump has tweeted that he supports the demonstrators, which is a dramatic shift from the Obama administration that was much more low key on such matters. If this situations deteriorates further, look for more safe-haven demand for gold and silver.

North Korea has made an overture to South Korea for negotiations, but is also maintaining it plans to ramp up its production of nuclear weapons, including leader Kim Jong Un reportedly saying he as a nuclear button on his desk. As the Winter Olympics in South Korea approach, don’t be surprised if North Korea tries to play the close-by event into its favour.

The bulls have gained the slight overall near-term technical advantage. Prices are in a steep three-week-old uptrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $18.00 an ounce.

The next downside price breakout objective for the bears is closing prices below solid support at the October low of $16.435. First resistance is seen at $17.25 and then at $17.50. Next support is seen at today’s low of $16.985 and then at $16.75.

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