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IGI Securities Limited – Commodity News

Karachi, January 12, 2018 (PPI-OT): Silver

Technical

Silver markets were choppy during the trading session on Thursday, as we have gone back and forth. I think that the $17 level continues to be rather important, as it is a large, round, psychologically significant number. If we can break above there, the market then will go to the $17.25 level. I think that the $16.85 level has offered a significant amount of support, and if we were to break down below there, we could probably go lower, perhaps reaching towards the $16.50 level. This is a market that continues to be influenced heavily by the US dollar, which has been struggling as of late. I think that the market will eventually break above the $17.25 level, and then eventually go looking towards the $17.50 area. I believe that the volatility will continue to be an issue in this market, so be careful in trading sewer, or at the very least, take some of the leverage out of the equation.

Highlights

Silver prices edged higher in yesterday’s session as the U.S dollar took a turn lower for the week

Precious Metals have seen biggest start to a month since the U.S presidential election in November 2016

It’s always common to see a New Year bump in new private-investors demand for gold and silver

The ICE U.S. Dollar Index fell by 0.5% and poised for a weekly loss of around 0.1%

The yield for the 10-year benchmark note was down 1.5 basis points to 2.542% yesterday, it’s still up around 3.5% week to date

Fundamentals

Silver prices traded higher in yesterday’s trading session after minutes of a European Central Bank meeting showed a more aggressive tone and boosted the euro against the U.S dollar.

The December meeting minutes said the central bank should revisit its policy message in early 2018 and gradually adjust its language to reflect improved growth prospects.

The euro gained against the dollar after the minutes from the ECB’s December meeting showed a hawkish tone. Investors would probably take a policy message change as a sign that rate-setters may begin to wind down their 2.55- trillion-euro bond-buying program.

The Dollar weakened more broadly after U.S data showed a rise in jobless claims and a decrease in producer prices, making gold cheaper for other non- U.S. buyers.

The U.S is set to tighten their quantitative easing, but other central banks around the world are going to play catch up. The weaker dollar has helped precious metals rally from its mid-December low, but it will struggle to rise much further in the short term.

Several other factors were supporting gold and silver prices, including a dip in global equities following a spectacular rally, and a rise in industrial metals that will increase the cost of goods and services.

Spot silver was up 0.1 percent in today’s Asian trading session at $16.96 an ounce from a two-week low of $16.86 on Wednesday. Platinum was up 1.31 percent at $983.70 an ounce after hitting $985.10, its highest since Sept. 15. Palladium rose 0.2 percent to $1,084.60 an ounce after touching a nine-day low of $1,075.50.

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