 "Silver price today: Sell with strict stop loss; resistance at Rs 93,400")
Silver: Up for a third straight day as bond rally continues
Silver Performance:
Spot silver was trading with a gain of around 0.95 per cent at $30.94 at the time of writing this report. The metal is up for the third straight day.
The MCX March silver contract at Rs 92,962, was up nearly 0.1 per cent.
COMEX silver is trading at a premium on a possibility of import tariffs on silver into the US.
Data roundup:
US retail advance sales came in at 0.4 per cent (forecast 0.6 per cent) month-on-month (M-o-M) for December, as ex-auto and gas sales were up 0.4 per cent (forecast 0.5 per cent). Retail sales control group, a more precise way to gauge consumer spending, was at 0.7 per cent, which was much better than the estimate of 0.4 per cent.
The prior retail sales data was revised higher from 0.7 per cent to 0.80 per cent. Import price Index M-o-M (December) was at 0.1 per cent, hotter than the estimate of -0.1 per cent, as even Y-o-Y reading at 1.8 per cent topped the forecast of 1.60 per cent.
Philadelphia Business outlook (December), at 44.30, surged to the highest level since April 2021 and was way better than the expected data of -5, as the prior data was revised higher. Weekly jobless claims at 217K were higher than the forecast of 210K; however, continuing claims at 1859K were lower than the estimate of 1870K. NAHB housing market index came in at 47 Vs the forecast of 45.
US core CPI increased 0.2 per cent M-o-M (forecast 0.30 per cent) in December, while core CPI Y-o-Y, at 3.2 per cent, fell short of the forecast of 3.3 per cent and was slower than the November pace of 3.3 per cent.
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The UK's monthly GDP data (November), released on Thursday, came in at 0.1 per cent, trailing the forecast of 0.2 per cent, as monthly GDP 3month/3month showed no growth and the prior data was revised lower from 0.1 per cent to 0 per cent.
US Dollar Index and yields:
The US Dollar Index, at 108.83, was around 0.20 per cent lower on the day at the timing of writing this report as it fell for the third day in a row on softer US yields. The ten-year US yields at 4.606 per cent were around 1 per cent down on the day as the yields fell to the lowest since January 6.
Upcoming data:
China data dump on January 17 include crucial GDP (Q4; released earlier today), industrial production (December), retail sales (December), property investment YTD Y-o-Y (December) and residential property sales YTD Y-o-Y (December). The major US data on the cards include housing starts and industrial production (both December). Traders will look forward to the Euro-zone's CPI Y-o-Y data (December final), too.
Major event ahead:
The incoming US President's inauguration is on January 20. Investors look forward to his inauguration speech to know about his economic and geopolitical policies and approaches that may significantly influence global financial markets including commodities prices.
COMEX inventory and ETF:
Total known silver ETF holdings were up for the fourth straight day on January 15 and stood at 718.886 MOz, the highest since December 13, as holdings increased by around 4.70 MOz on January 15. COMEX silver inventory increased for the seventh straight day to 328.80MOz, a fresh cycle high, on January 15.
Silver Outlook:
The ongoing rally in both gold and silver is majorly about decline in the US yields, which in turn, is leading to easing US Dollar. Today's China data is important as it will be used to assess the impact of China's stimulus blitz in September. The major risk will come from Trump's inauguration speech on Monday.
Precious metals and bonds look overextended as the US nonfarm payroll report was robust and a slight miss in the US CPI readings won't change in the Fed's hawkish stance and its assessments of the US economy. Tariff issue is a threat to commodities in general. Markets expect leniency on tariffs and are looking for a rate cut in March. A lot can go wrong in these two assumptions.
Selling with a tight stoploss is preferred. Support is at $30 (Rs 90,200)/$29.60 (Rs 89,000). Resistance is at $31.10 (Rs 93,400)/$31.50 (Rs 94,600)/$31.85 (Rs 95,600).
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Disclaimer: This article is by Praveen Singh, associate VP, fundamental currencies and commodities at Mirae Asset Sharekhan. Views expressed are his own.