 "Silver price today falls over 2%; here are key support, resistance levels")
Silver: Vulnerable as Chinese Economic Conference short on stimulus details
Silver Performance:
Like Gold, Silver, too, extended its winning streak to the fifth day on December 12 on an unexpected 50-bps rate cut by Swiss National Bank and political concerns as South Korea's President Yoon is set to face second impeachment.
The metal took the stiff resistance at $32.28 in the European session. However, China's economic policy announcements disappointed yet again as the Central Economic Work Conference (CEWC), which concluded on Thursday, was short on the specific details of stimulus measures that include fiscal spending, rate cuts, and other supportive measures for the economy.
Commodities, including Silver, tumbled as traders' hopes were belied once more. At the same time, hotter-than-expected US PPI data and a dovish 25-bps rate cut by the European Central Bank increased the downside pressure on the metal.
Silver tumbled below $31. The metal, at the time of writing this report, is trading at $31.07, down 2.57 per cent on the day. The MCX March silver contract at Rs 92,776, is down 2.79 per cent.
Data roundup:
The US PPI data (November) turned out to be hotter-than-expected: the PPI final demand M-o-M at 0.4 per cent (the fastest rise in the last five months) and PPI final demand Y-o-Y at 3 per cent topped their respective forecasts of 0.2 per cent and 2.6 per cent.
Similarly, core PPI M-o-M and Y-o-Y came in at 0.2 per cent (forecast 0.2 per cent) and 3.4 per cent (forecast 3.2 per cent), respectively. PPI final demand M-o-M/Y-o-Y and core PPI final demand Y-o-Y of October were revised higher. Weekly US jobless claims surged to two-month high reading of 242K (forecast 220K) from 225K as even continuing claims were higher-than-expected to remain at a 3-year high level.
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Data released on Wednesday showed that the US CPI data were in line with the forecast but were higher than the October figures as CPI M-o-M and Y-o-Y were noted at 0.30 per cent (prior 0.20 per cent) and 2.7 per cent (2.60 per cent). Core CPI data at 0.3 per cent M-o-M and 3.3 per cent Y-o-Y matched their respective forecasts but still show high inflation.
Central bank watch:
As expected, the European Central Bank (ECB) slashed the key rates by 25 bps. The Bank removed references to “restrictive policy” in its policy guidance as it remains open to further cuts due to struggling economy and subdued inflation. In fact, some of the policymakers discussed a 50-bps rate cut, too.
The Swiss National Bank (SNB) cut the benchmark rate by 50 bps which was larger than a 25-bps cut expected by the most. Larger-than-expected rate cut was delivered to check the strength of the Franc against the US Dollar. The Bank removed the allusion to “further rate cuts” in its guidance.
Upcoming data:
Today's US data include import price indices (November).
ETF and COMEX Inventory:
Total known global silver ETF holdings fell to 728.288MOz on December 11, lowest since mid-October, whereas COMEX silver inventory stood at 307.822MOz as on December 11, highest since December 3.
China’s silver imports:
China imported 244.382 million grams of silver in October, the lowest import volume since February 2024.
New York premiums:
Premiums for gold and silver futures in New York have risen on a possibility of imposition of tariff measures by the incoming Trump Administration. The move has roiled 'exchange for physical trade' (EFP).
Silver Outlook:
Lack of China's specific details is bearish for the metal as huge expectations from the Economic Conference had played a key role in the recent recovery of the metal. Now, traders will turn their focus to the US FOMC monetary policy decision due on December 18. A Fed rate cut of 25-bps is fully almost fully priced-in. As the US inflation continues to be uncomfortably high, the Fed is expected to hit a temporary pause button after the rate cut decision next week.
In this scenario, the metal is vulnerable. At the same time, lingering and elevated geopolitical risks coupled with expected Chinese stimulus next year will limit the downside. Nonetheless, in the near-term, support at $30.50 (Rs 91,000) is likely to be tested. The next major support is at $30 (Rs 89,600). Resistance is at $31.30 (Rs 93,400)/$31.70 (Rs 94,700). ================== Disclaimer: This article is by Praveen Singh, associate VP, fundamental currencies and commodities at Mirae Asset Sharekhan. Views expressed are his own.