 "Silver may trade with positive bias, yet extreme volatility likely: Analyst")
Performance:
- Spot silver, at the time of writing this report, was trading at $53.70, up nearly 1.3 per cent for the day, as it hit a fresh record high of $54.17.
- Silver, moving in lockstep with gold, has risen for eight consecutive weeks.
- The grey metal has surged 45 per cent from its August 1 low of $37.03.
Two regional US banks report problems:
- A pair of regional US banks tumbled as they disclosed problems with loans involving allegations of fraud.
- Zions Bancorp slumped after it disclosed a $50 million charge-off for a loan underwritten by its wholly owned subsidiary, California Bank & Trust, in San Diego.
- Western Alliance Bancorp said it is dealing with a borrower that failed to provide collateral loans in the first position.
Geopolitics watch:
- US President Donald Trump said he would meet Russian President Putin in Hungary to seek an end to the Ukraine war. The date is yet to be decided though. The said meeting will take place a day before Trump's White House meeting with Ukrainian leader Zelenskiy.
- US-China trade tension has flared once again following China's recent decision to unveil unprecedented controls on the rare-earth supply chain.US Treasury Secretary Bessent said that there is a possibility of extending a pause of import duties on Chinese goods for longer than three months if China loosens its controls on rare earths. It is to be noted that tariff truce between these two nations is set to end on November 10.
- Meanwhile, Bessent also floated the idea of a coordinated response to China's export controls. The International Monetary Fund (IMF) called China's export restrictions harmful to a fragile world economy. China, in turn, has blamed the US for recent escalations in trade tensions. In September, after Madrid talks between the two countries, the US Commerce Department came out with a rule that widened the application of sanctions to companies affiliated with blacklisted Chinese companies. As per the rule, subsidiaries that are at least 50 per cent owned by blacklisted companies will face the same curbs as their sanctioned parents with increased focus on due diligence requirements for shipments to entities with significant minority ownership.
Mumbai's Zaveri Bazaar has stopped accepting silver orders:
As per Financial Express, jewellery in Zaveri Bazaar have stopped accepting fresh orders due to acute silver shortage which has resulted into a premium of as high as ₹30,000. Reportedly, Indian Bullion and Jewellery Association (IBJA) has written to the Securities Exchange Board of India (Sebi) to allow fund houses, which have silver ETFs, to sell part of their 3,000 ton holding in the spot market and buy in the futures to ease the spot premiums and cool down prices.
It is to be noted that over the past few days, several fund houses have stopped accepting new investments into their silver ETF fund of funds.
London's Royal Mint warns of delivery delays:
Royal Mint has warned of possible delays in silver deliveries as it races to replenish its reserve due to a global surge in demand for silver. London inventories have fallen by about a third since 2021 and lease rates remain high in double digits.
Section 232 probe:
Investors monitor the situation on Section 232 probe on critical minerals which include silver, too. Section 232 probe on critical minerals is still underway and is expected to conclude in October 2025, with a final report submitted to the President. A major concern of investors is whether the Trump Administration will impose tariffs on silver and other commodities.
Silver ETFs and COMEX inventory:
- As of October 15, total known global silver ETF holdings stood at 832.91 MOz, near cycle high. ETF holdings are up nearly 16 per cent, which acts as a strong tailwind for silver prices.
- COMEX silver inventory has come down from a record high level of 531.48 MOz (as of September 29) to 512.71 MOz, which amounts to a decline of around 584 tons. Inventories leaving the COMEX warehouses are probably headed towards London as London silver prices have been trading at a huge premium to COMEX futures prices.
Upcoming data:
Major US data on cards include housing starts (October 17), import and export price Indices (October 17), TIC flows (October 18), Leading Index (October 20), existing home sales (October 23). However, there is a possibility that at least some of these data may get delayed due to ongoing government shutdown.
Outlook:
- London market tightness is expected to ease as silver starts flowing from New York. However, demand remains quite strong as reflected by huge ETF inflows.
- At the same time, strength in gold is also supportive for the metal as a confluence of factors like escalating trade tensions, rate cut expectations, a softer US dollar, fall in US yields, geopolitical worries and US banks’ troubles comes into play.
- Silver is likely to trade with a positive bias, but extreme volatility cannot be ruled out.
- A decisive breach of $55 resistance will open a way to the $58 mark.
- Support is seen at $52.50/$50.