IGI Securities Limited – Commodity News
Web Desk
Karachi, January 08, 2018 (PPI-OT): Silver
Technical
Silver markets initially drifted sideways and quiet trading, awaiting the Nonfarm Payroll announcements come out. Now that we had formed this bullish candle, it’s likely that we will continue to go higher, perhaps reaching towards the $17.50 level above. Short-term pullbacks will more than likely offer buying opportunities, and I think that we will eventually go much higher. I think the $17 level should be an area that buyers will be attracted to based upon value, and the fact that it has offered support several times. This is basically a reaction in a “anti-dollar” theme, as precious metals have been working to the upside as the US dollar has been falling. The gap just below the $17 level also offers a significant amount of support, so keep this in mind when trading this market. I believe that $17 is going to be very difficult to break through to the downside.
Highlights
Silver prices inched down a bit after the dollar firmed on expectations of further U.S. interest rate hikes this year
The U.S December non-farm payrolls report on Friday was weaker than expected well below the 190,000 forecast by economists
The U.S economy added 148,000 jobs in December
The dollar briefly slid to the day’s lows following the report before regaining ground
The jobs data was seen as unlikely to alter investor expectations for a rate hike by the U.S
Fundamentals
Silver prices fell today as the stronger dollar weighed after Friday’s weaker- than-expected U.S jobs report did little to alter expectations for further Federal Reserve rate hikes this year.
Prices of the precious metal were pressured lower as the dollar moved higher against a basket of the other major currencies. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.25% to 91.98, up from its January 2 trough of 91.47, which was the lowest level since September 20.
The U.S. economy added 148,000 jobs in December, the Labour Department reported in Friday’s trading session, well below the 190,000 forecast by economists. The dollar briefly slid to the day’s lows following the report before regaining ground.
The jobs data was seen as unlikely to alter investor expectations for a rate hike by the U.S. central bank at its March meeting. Fed officials have penciled in three rate increases this year and two in 2019.
Gold and silver prices are highly sensitive to rising U.S. interest rates, as they increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Recent weakness in the dollar had supported gold prices by making the dollar- denominated metal cheaper for holders of other currencies. Silver was down 0.69% at $17.16 a troy ounce, while platinum fell 0.41% to trade at $971.20 a troy ounce.
Physical gold and silver demand across Asia remained subdued last week as prices rallied to a three-and-a-half-month high, keeping retail buyers away from the market.
