Silver to test stiff resistance at $31.75; here's what Sharekhan suggests

Silver: consolidation ahead of the US monthly job report

Spot silver is changing hands at $31.37, up around 0.22 per cent on the day, at the time of writing this report. The metal traded in the range of $31-$31.43 on December 5.

 

Silver bulls look forward to China’s two-day Central Economic Work Conference (CEWC) beginning on December 11 in which the authorities are expected to decide on stimulus and growth targets for the next year. Expectations of more stimulus, especially fiscal stimulus, from the conference is keeping the metal buoyant.   

 

Data roundup:

The US data released on December 5 were largely mixed: The US October trade deficit at $73.80 billion was lower than the expected $75 billion deficit. Weekly jobless claims swelled to 224,000 -- highest since October 18--from 2,15,000 and were higher than the expected data of 2,15,000. Continuing claims inched lower to 18,71,000 from 18,96,000 -- three-year high.

 

 

US ISM services (November), released on Wednesday, came in at 52.10 (estimate 55.70) as even ISM employment at 51.50 trailed the forecast of 53. Earlier releases showed that ISM manufacturing (November) came in at 48.40 (forecast 47.50), as ISM new orders 50.40 (forecast 48) and ISM employment at 48.1 (forecast 47) topped their respective forecasts.

 

Upcoming data:

The US nonfarm payroll report for November will be the main attraction of the day. The report is crucial for precious metals. The October report reflected an alarmingly weak labour market as the US employers added merely 12,000 jobs, the four-year low, though some of the weakness was attributed to hurricanes and layoffs. Apart from the monthly job report, University of Michigan sentiment (December preliminary) and inflation expectations data are also slated to be released.

 

ETF and COMEX inventory:

Total known global silver ETF holdings fell for the third straight day to 730.559Moz on December 4, the lowest since October 18. COMEX silver inventory was noted at 306.541 Moz as on December 4, lowest since October 21.

 

Perth Gold mint silver sales:

As per Perth Gold Mint, owned by the government of Western Australia, sales of gold coins and minted bars rose 94.2 per cent in November to 58,136 ounces, the highest since June 2023, whereas, silver product sales rose 95.5 per cent month-on-month to 1,055,657 ounces, the highest level since October 2023.

 

Outlook:

Silver has been trading with a positive bias in the last few sessions as traders look forward to the upcoming China's CEWC meeting in which we expect the authorities to give some concrete clues about the possible stimulus and economic targets in 2025.

 

We expect the metal to test the stiff resistance at $31.75 (MCX Silver March Rs 94,500) sometime next week unless the US job report is excessively strong. Support is at $31 (Rs 92,200)/$30.75 (Rs 91,600).  (This article is by Praveen Singh, associate VP, fundamental currencies and commodities at Mirae Asset Sharekhan, Views expressed are his own.)