Silver is poised to trade with positive bias in near-term: Sharekhan

Silver- likely to gain on geopolitical concerns

 

Performance:

Spot silver, at the time of writing this report, was trading steady at $30.87; the MCX December silver contract was at Rs 89,900.

 

Although gold is showing considerable strength on heightened geopolitical tensions, silver is struggling.

 

Traders are concerned that the Russia-Ukraine war is likely to take dangerous turns on escalating tensions.

 

On November 21, Ukraine said that Russia had launched an ICBM, the first time in this war, at the Ukrainian city of Dnipro. The ICBM missile attack followed Ukraine firing long-range American ATACMS missiles and the British Storm Shadow missiles inside Russia after the approval of the US and the UK to use these missiles. 

 

 

Russia, in retaliation, has lowered its nuclear doctrine threshold, which makes the use of tactical nuclear weapons probable. 

 

Data roundup:

The US data released on Thursday were mixed: Philadelphia Fed business outlook (November) came in at -5.50 (forecast 8, prior 10.3); initial jobless claims dipped to 2,13,000 from 2,19,000 but continuing claims soared to 19,08,000 from 18,72,000); Leading Index (October) at -0.4 per cent trailed the forecast of -0.30 per cent; existing home sales (October) at 3.96M were slightly better than the forecast of 3.95M, though September data was revised a tad lower.

 

Upcoming data:

Today's major US data on the cards include the S&P Purchasing Managers' Index (PMIs) (November preliminary) and the University of Michigan sentiment and inflation expectations (November final readings). 

 

Traders will also monitor the PMIs of the UK, the Eurozone, and Germany.

 

ETF:

Total known global silver ETF holdings stood at 742.022MOz -- highest in nearly a week -- as of November 20, 2024.

 

The Silver Institute on silver as a strategic asset:

On November 19, the Institute, in a jointly commissioned study with Capitalight Research Inc. of Canada, came out with a new report ‘Silver’s strategic edge: Navigating the tectonic shifts in global markets’, in which it asserted that institutional investors seeking to strengthen their portfolios through diversification should consider silver as a strategic asset as the metal offers a unique blend of stability and growth potential and it has got a significant safe haven feature amid growing industrial applications. 

 

The report also highlighted the crucial role of the metal in green energy transitions.

 

Outlook:

Silver, despite being somewhat sluggish, is expected to trade with a positive bias in the near term unless the US yields surge yet again to uncomfortable levels. The geopolitical backdrop is supportive of the white metal, though weakness in the industrial metals is holding it back.

 

Silver support is at $30.39 (Rs 88,500)/$30 (Rs 87,300). The metal is expected to test the key resistance at $31.80 (Rs 92,600). The interim resistance is at $31.30 (Rs 91.200).  (This article is by Praveen Singh, associate VP, fundamental currencies and commodities at Sharekhan by BNP Paribas. Views expressed are his own.)