Silver rate today: White metal has resistance at Rs 1,06,000; strategy here

Silver rate today: Unless we see a sharp decline in gold or copper prices, silver is likely to trade with a bullish bias

Silver surges on safe haven buying as bulls eye $37 level

Silver performance:

Spot silver surged nearly 3 per cent on October 22 as the rally gathered momentum following a breakout above $33, that came after a five-month congestion period. The white metal, at the time of the MCX closing, was fetching a price of $34.83, up nearly 3 per cent on the day, The MCX December silver contract, meanwhile, were at Rs 99,960, was up 2.58 per cent.

Silver has surged to a 12-year high as gold-silver ratio fell to 78.80 on Tuesday, the lowest since July 17. 

Bulls are fixated mainly on the uncertainty around the US Presidential election result, possibility of a surge in the US fiscal deficit, and elevated geopolitical tensions. As gold is gaining momentum on the ongoing BRICS summit, silver is benefiting on this factor too. Thus, safe have demand continues to be the main driver currently. 

 

US Dollar Index and yields:

Precious metals continue to ignore the US yields, Dollar Index and the data.

The ten-year yields rose to 4.22 per cent, the highest since July 26, as bond traders fret over the possibility of a jump in the US fiscal deficit irrespective of the Presidential election outcome.

The US Dollar Index at 104.03, the highest level since August 2, was up by 0.03 per cent.  

Fedspeak:

Federal Reserve Bank of Kansas City President Jeffrey Schmid favours a slower pace of rate hike to sustain economic growth, stable prices and full employment. Federal Reserve Bank of Minneapolis President Kashkari reiterated that he favours reducing rates at a slower pace in coming quarters unless the labour market deteriorates more rapidly.

IMF forecasts:

IMF, in its latest projections for the global economy released on Wednesday, said that the global economy is expected to grow 3.20 per cent in 2025, down 0.10 per cent from its July projection as it sees global inflation slowing down to 4.30 per cent in 2025 from 5.80 per cent in 2024. 

The US economy is likely to grow slightly stronger at 2.80 per cent in 2024 and 2.20 per cent next year as it is close to achieving soft landing. However, it revised its forecast for China's growth this year down slightly to 4.8 per cent from 5 per cent in July forecast on property market concerns. IMF also warned on trade friction as it can slash global GDP by 0.50 per cent.

IMF, earlier in the week, warned that the global public debt is set to $100 trillion this year.

Data roundup:

Philadelphia Fed non-manufacturing activity in October rose to 6 (forecast 4.10) from -6.10 in September.

Upcoming data:

The major US data to be released on Wednesday include existing home sales (September), though the Thursday's data docket that includes weekly jobless claims, new home sales and S&P global US PMIs will be more important. The European PMI data will also be released on Thursday.

Silver ETF and inventory:

Total known global silver ETF holdings rose for the third straight day to 732.15 Moz - the highest level since July 2023 - as the holdings rose for the fifth consecutive week. Meanwhile, the COMEX silver inventory at 306.533 Moz continues to hover around one-year high level.

Silver Outlook:

Unless we see a sharp decline in gold or copper prices, the white metal is likely to trade with a bullish bias. Gold/silver ratio is at a crucial support around 78; the next major support below it comes to be around 72.

The metal is likely to test resistance around $37 (Rs 106,000) in the coming weeks. Interim resistance is around $35.50 (Rs 101,500). Support is at $33.75 (Rs 97,000)/$33 (Rs 94,700). Looking at the volatility and crosscurrents of headlines, buying the dips is preferable.

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Disclaimer: Praveen Singh is associate vice president of fundamental currencies and commodities at Sharekhan by BNP Paribas. Views expressed are his own.