Silver slides 3% on June 04; watch out for these support levels: Sharekhan

Silver has got a strong support at $29 (Rs 87,800), followed by $28.35 (Rs 86,000), says Praveen Singh, AVP - Fundamental Currencies and Commodities at Sharekhan by BNP Paribas.

Spot silver rallied over 1 per cent Monday; however, the white metal came under intense downside pressure Tuesday despite disappointing US data as Dollar edged up in a risk off scenario. The metal fell to the lowest level since May 16.

Silver tumbled despite sharp decline in the US yields. A slight appreciation in the US Dollar does not justify this sharp decline, though poor risk appetite and weak outside markets also contributed to the decline.

Spot silver, at the time of the MCX closing was trading 3.85 per cent down at $29.50, while the MCX July contract at Rs 89,630 was down 2.61 per cent on the day. Sharp depreciation in the domestic currency due to results showing tight contest in the Lok Sabha elections limited the downside. 

 

Data round up

US data continued to be mostly disappointing. ISM manufacturing (May), released Monday, came in at 48.70 as against the forecast of 49.50. ISM prices paid at 57 and ISM new orders lagged the respective forecasts of 59 and 49.40, though ISM employment (May) showed expansion with a reading of 51.10 Vs the forecast of 48.60.

JOLTs job openings (April), released Tuesday, stood at 8,059K as against the forecast of 8350K, while the prior data was revised lower to 8,355K from 8,488K. Although factory orders in April rose 0.70 per cent Vs the forecast of 0.60 per cent, the prior data was revised lower to 0.70 per cent from 1.60 per cent. Durable goods orders (April final) at 0.60 per cent trailed the forecast of 0.6 per cent, though the ex-transport data reading of 0.40% matched the forecast.

ETF

Total know silver edged higher to 684.353 Moz on June 3 from 684.29Moz.

Upcoming US data

Wednesday's US data on tap include ADP employment change (May), S&P Global US services PMI (May final) and ISM services (May).

Outlook

The metal has got a strong support at $29 (Rs 87,800), followed by $28.35 (Rs 86,000). The metal is somewhat oversold as the yields are falling and Chinese demand remains strong. Traders are expected to buy the dips with tight stop-losses. Resistance is at $30 (Rs 91,000) /$31 (Rs 94,000).

Disclaimer: Praveen Singh is Associate Vice President of Fundamental Currencies and Commodities at Sharekhan by BNP Paribas. Views expressed are his own.