IGI Securities Limited – Commodity News
Web Desk
Karachi, January 16, 2018 (PPI-OT): Silver
Technical
Silver markets were noisy during the opening hours of Monday, but then settled near the $17.30 level. Ultimately, silver looks bullish, as we should continue to see buyers going forward, giving us an opportunity to buy dips based upon value. The anti-US dollar sentiment should continue to be an issue where we see precious metals rally, as well as other currencies around the world. I believe that the market should continue to see dips as opportunities, and I believe that longer-term traders are starting to get involved in the Silver markets as well. I don’t like trading highly leveraged positions though, because Silver tends to be very noisy. The market should continue to be one that you can trade from a longer-term standpoint, perhaps trading physical silver or at least options. Longer-term, I believe that the $18.50 level is the top of a massive consolidation area.
Highlights
Silver was down 1.8 percent to $17.05 an ounce today in Asian session, off the previous day’s three-month high of $17.42
The Dollar clawed back some lost ground today in Asian session after hitting a three-year low against a currency basket
Dollar weakness has calmed down, and that is one reason why silver prices are retracing lower
Silver remained relatively firm in the face of three U.S interest hikes in 2017
Platinum was 1.4 percent lower at $982.24, after touching its strongest since Sept. 11 at $1,001.40
Fundamentals
Silver prices gaines in yesterday’s trading session as the U.S. dollar index slumped to its lowest in three years but analysts warned the greenback’s decline could be short-lived as it was not driven by fundamentals.
The weakness in the dollar is not justified by fundamentals. It’s a little bit weird considering the divergence in monetary policy should play in favour of a stronger dollar.
She said the U.S. Federal Reserve is widely expected to raise interest rates, which would favour a stronger dollar, while the European Central Bank should keep rates on hold. The dollar index was down 0.2 percent at 90.474, having reached its weakest since January 2015 at 90.421.
A lower greenback makes dollar-denominated assets such as gold cheaper for holders of other currencies, while higher rates could dent demand for gold and silver.
The main reason for the tight relationship between the dollar and gold is a lack of physical demand on the gold side in terms of ETFs (exchange-traded funds) and Indian and Chinese jewellery.
Adding a touch of bullishness to gold was data from the U.S. Commodity Futures Trading Commission on Friday, which showed that hedge funds and money managers raised their net long positions in COMEX gold and silver in the week to Jan. 9.
Iran’s president said on Sunday the United States had failed to undermine a nuclear deal between Tehran and major powers, and hailed the accord as a “long-lasting victory” for Iran, state television reported. U.S. President Donald Trump on Friday delivered an ultimatum to European signatories of the deal to fix the “terrible flaws” of the agreement with Iran, or the United States would pull out.
