Silver trading strategy: Support at Rs 86,700, resistance at Rs 91,100

Silver: Bulls and bears fight over $29.70/$30 level

 

Performance

 

Spot silver followed gold and copper higher as China’s bond buying program is supportive for the metal in near-term. It rose to $29.87. However, it lost the upward momentum on the US yields gained further.

 

The white metal, at the time of writing this report, is trading at $29.65, up around 0.08 per cent on the day. It traded in the range of $29.51-$29.87 during the day.

 

The MCX March Silver contract is at Rs 58,487, up around 0.17 per cent on the day.

 

Data roundup

 

 

In a somewhat positive development for silver, the World Bank has revised up China's real GDP growth for this year and next by 0.1 per cent and 0.4 per cent respectively to 4.9 percent and 4.5 percent, respectively, as compared to June projections on the effect of recent policy easing and export strength; however, the Bank has warned that property sector challenges and subdued household and business confidence will continue to weigh on growth next year. The Bank highlighted the need for structural reforms amid low consumption, highly leveraged property sector and local governments as conventional stimulus measures may not be adequate.

 

Upcoming data

 

Today’s US data include advance goods trade balance (November).

 

China’s industrial profit data (November) will also be released today.

 

US pending home sales (November) and housing prices (October) will be released on December 30 and December 31 respectively.

 

US Dollar and yields

 

The US bond yields continue to remain buoyant despite a string of subdued US data of late as traders are focusing more on the Fed’s monetary policy guidance rather than data. 

 

The ten-year US yields at 4.62 per cent, the highest level since May 29, were up nearly 0.64 per cent on the day.  The US Dollar Index at 108.17 was down around 0.02 per cent. The two-year yields at 4.35 per cent, highest level since November 22, were up 0.35 per cent on the day.

 

ETF flows and COMEX inventory

 

Total known global silver ETF holdings rose for the fifth straight day to 715.258Moz, the highest level since December 13, on December 25.

 

COMEX Silver inventory rose to 314.826 Moz, the highest level since September 2022, on December 24.

 

Market balance in 2025

 

With a constrained supply growth and rising industrial usages, silver is mostly headed for a fifth straight year of deficit in 2025. Record high industrial demand, driven by its usages in EV, renewable energy, and electronics, is up 7 per cent y-o-y as the deficit in 2024 stood at 182 Moz.

 

Outlook

 

China’s bond buying plan and the World Bank’s revised growth projections for China are positive for the metal. A slight pickup in ETF inflows of late is also positive for the metal. However, the downside risk exists due to surging US yields and buoyant US Dollar.

 

The metal is likely to trade with a positive bias in very short term on China’s stimulus efforts and the World Bank revising up China’s growth projections.

 

It may rise above $30 (Rs 90,500) to test the resistance at $30.20 (Rs 91,100). Support is at $29.40 (MCX Silver contract Rs 88,700)/$29 (Rs 87,500)/$28.75(Rs 86,700). Interim resistance is at $29.70 (Rs 89,600).  

 

A close above $30 will be quite positive for the metal; thus, volatility around this level is possible.

 

(Disclaimer: Praveen Singh is an associate VP of fundamental currencies and commodities, Mirae Asset Sharekhan. Views expressed are his own.)