 "Silver may get dragged down with industrial metals; Dip buying preferred")
Spot silver was trading at $31.65, down around $0.02 as the metal stumbled at $32 mark. The MCX December Silver contract at Rs 91,778 was down around 0.44 per cent.
Given the surge in the US yields and the US Dollar Index and yet another disappointing stimulus briefing by China, the white metal did well.
Given the surge in the US yields and the US Dollar Index and yet another disappointing stimulus briefing by China, the white metal did well.
The US Dollar Index approached 104 as the two-year and the ten-year US yields rose nearly 1.3 per cent and 2 per cent respectively.
Data and event roundup:
US retail sales advance (September) rose 0.40 per cent m-o-m (forecast 0.30 per cent), while retail sales ex auto and gas at 0.70 per cent beat the forecast of 0.30 per cent as the prior data was revised higher from 0.20 per cent to 0.30 per cent. Retail Sales control Group (September), which is a better gauge of consumer spending, surged 0.70 per cent Vs the forecast of 0.30 per cent rise. Initial jobless claims came in at 241K Vs the forecast of 259K as the impact of the hurricane Helene waned to an extent. Philadelphia Fed Business Outlook and NAHB housing Index data also topped the forecast, though industrial production at -0.30 per cent fell short of -0.20 per cent forecast.
As per Bloomberg, due to a series of stronger than expected data out of the US, the Citigroup's surprise Index is at the highest level since April.
As expected, the ECB cut the rates by 25 bps, its third cut of the year, to support the private-sector growth amid a sharp decline in the CPI inflation. The September CPI inflation was revised lower from 1.80 per cent to 1.70 per cent. The Bank is expected to cut rates in December, too.
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China’s data dump on Friday is crucial for the metal.
The country's economy expanded 4.6 per cent in the Q3 Y-o-Y, as against 4.7 per cent, beating analysts' expectations of 4.5 per cent. On a quarterly basis, the economy expanded 0.9 per cent in Q3 as against 0.7 per cent growth in April-June.
Also, as per reports, China’s largest state-owned lenders have cut their deposit rates on Friday. Major banks including Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. trimmed the interest offered on one-year, two-year, three-year, and five-year time deposits by 25 basis points.
Today's major US data releases include housing starts (September).
ETF:
Total known global silver ETF holdings stood at 717.105Moz, down slightly from the 728.062 Moz seen at the end of the previous week. COMEX Silver inventory at 306.126 MOz was higher than 306.01 MOz inventory as on October 11.
LBMA 2024:
Annual survey at London Bullion market association (LBMA) finds silver likely to be the leader of the pack next year as respondents expect the metal to rise to $45 on silver’s growing industrial demand, which is leading to a huge deficit. Gold is expected hit to hit $2,941.40 an ounce by this time next year.
Outlook:
Silver is expected to trade with a positive bias in near term on the US presidential election uncertainties, healthy ETF inflows, strong demand in India and geopolitical tensions. The metal may occasionally get dragged lower with industrial commodities; however, dip buying is preferred.
Support is at $31(Rs 90,000)/$30.75 (Rs 89,200). Resistance is at $32 (Rs 92,800)/$32.50 (Rs 94,200)/$33 (Rs 95,500) .
We expect the metal to rise to $33 in very short term.
Also, as per reports, China’s largest state-owned lenders have cut their deposit rates on Friday. Major banks including Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. trimmed the interest offered on one-year, two-year, three-year, and five-year time deposits by 25 basis points.
Disclaimer: Praveen Singh is associate vice president of fundamental currencies and commodities at Sharekhan by BNP Paribas. Views expressed are his own.