 "Silver prices today: White metal to stay volatile; eyes Rs 1,07,000 target")
Silver sharply up as the US job data disappoints, China plans more stimulus
Silver price today:
Spot silver surged over 2.25 per cent to $34.52 on October 29, 2024, as precious metals traders continue to ignore the traditional drivers like high yields, the US dollar Index, macroeconomic data, etc to focus mainly on the US debt and deficit, geopolitical tensions, and uncertainty about the US presidential election results.
The white metal was around $34.32, up roughly 2 per cent at the time of the MCX closing. The MCX December silver contract at Rs 98,763 was up 1.37 per cent for the day.
US yields and the Dollar Index:
The US ten-year yields were highly volatile as the yields surged to 4.34 per cent, the highest level since July and a fresh cycle high, before falling to 4.28 per cent. The two-year yields, which closed at 4.12 per cent (the highest since August 1), slid nearly 1 per cent from the top. The US Dollar Index rallied to 104.64, the highest level since February.
Data round-up:
The US data were largely mixed. Major focus, however, was on JOLTs job openings (September), which, at 7,443K, fell well short of forecast of 8,000K as even the prior month data was revised lower from 8040K to 7861K. The dismal job data boosted the precious metals further.
Conference Board Consumer Confidence surged to 108.70 vs the forecast of 99.50, the highest level since March 2020 as consumers felt more confident about broader economy and labour market conditions. Even the prior data was revised higher. FHFA House Price Index (August) came in at 0.30 per cent (forecast 0.10 per cent).
Upcoming US, China data:
Today's major US data on tap include ADP employment change (October), Q3-CY24 advanced GDP, personal consumption (Q3 advance) and pending home sales (September). The US GDP data is likely to be a robust one consumer spending, though it is likely to cool down going ahead.
This week is crucial as we have got US nonfarm payroll (October), US ISM manufacturing and US PCE inflation (September) data ahead in the week. In addition, China's manufacturing and non-manufacturing will also be released on October 31.
Also Read
Out of the Euro-zone, focus will be on CPI, GDP, employment data of the Euro-zone and Germany.
Silver ETF holdings and inventory:
Total known silver ETF holdings stood at 740.162Moz, the highest since July 2023, as on October 28, though slightly lower than 742MOz seen at the end of the last week. COMEX silver inventory stood at 307.49MOz, near two-year high as on October 28.
China stimulus news:
In a somewhat positive development for the metal, Reuters reported that China is weighing approving over 10 trillion yuan ($1.4 trillion) in additional borrowing in the coming years to shore up the economy and address local governments’ debt risks, though it is to be noted that industrial commodities fell despite this development entailing more stimulus out of China.
The fiscal stimulus may be approved at a meeting by China’s top legislative body to be held Nov. 4-8.
Outlook:
The metal is expected to be highly volatile and choppy as this week is packed with crucial data out of both China and the US, and the next week will be all about the US presidential election outcomes. Elevated US yields, a firmer US Dollar, and the concerns about the Chinese economy are negative for the metal; though industrial demand for the metal is at a record high. For silver to do well, gold needs to do well, too; at least until investors become more confident about the Chinese economy. Nonetheless, outlook of the metal is constructive.
Overall, buying the dips remains the preferred strategy.
Support is at $34 (Rs 97,800)/$33.50 (Rs 96,400)/$33 (Rs 95,000). Resistance is at $35 (Rs 101,000)/$35.60 (Rs 102,500).
We look for a target of $37 (Rs 107,000) in short term. ==================== Disclaimer: Praveen Singh – Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas. Views expressed are his own.