Silver may fall to $29 in near-term; here's how to trade white metal today

With China's fiscal stimulus failing to excite investors, Silver is likely to be under pressure in the short term, even gold and copper prices weaken

Silver: Falling with gold and copper as US Dollar and yields surge

Performance:

On November 12, spot silver tumbled to $30,19, the lowest level since September 19 as both gold and copper are being hammered lower amid rallying US Dollar and surging US yields.

 

Gold is suffering as investors shunned the safe haven appeal of the yellow metal to pile into risk assets on optimism over the US growth prospects with Trump as the next US president. His proposed economic policies of tax cuts and deregulation are being taken as favourable for US growth. Copper is falling on stronger US dollar and concerns about the Chinese economy as the nation refrained from coming out with a convincing fiscal stimulus.

 

Silver has tumbled nearly 12 per cent since it hit its cycle high of $34.90 on October 23.

 

Silver at $30.60 is down around 0.25 per cent at the time of writing this report. The MCX December silver is at Rs 89,200.

 

Bitcoin:

Investors are rotating out of precious metals into bitcoin and other risk assets; bitcoin reached a fresh record high above $89K on November 12. Bitcoin has rallied 25 per cent this week as it is expected that the US government may increase its Bitcoin reserves of 232,000 to over a million bitcoins.

 

US yields and dollar:

Both US yields and the dollar index are surging as the Trump trades are once again gaining momentum. The US bonds are also facing the heat: the ten-year yields have surged to 4.43 per cent, up around 2.80 per cent on the day. The 2-year US yields at 4.36 per cent are up around 2 per cent. Both ten-year and two-year yields are at their highest levels since July 2024.

 

The US dollar index has taken out the psychological resistance at 106, the highest since June 2024 as the Euro, Yen, and Pound are slumping.

 

ETF:

ETFs cut 251,127 troy ounces in the last session, paring this year's net purchases to 42.4 million ounces.

 

Outlook:

In the absence of China's fiscal stimulus, the metal is likely to be under pressure in the short term. Weakness in gold and copper will weigh on the metal. It may fall to $29 (Rs 84,500) briefly. Interim support is at $30.31 (Rs 88,300)/$30 (Rs 87.500). Resistance is at $30.90 (Rs 90,000) /$31.50 (Rs 92,000) .

 

While the metal is seen weakening further in the short term, fundamentals remain intact for higher prices in the medium to long term.  (This article is by Praveen Singh, associate VP, fundamental currencies and commodities at Sharekhan by BNP Paribas. Views expressed are his own.)