Silver– Sharply higher on rate cut bets
Silver Performance
Spot silver surged nearly 2 per cent on July 16 on US Fed rate cut bets.
The spot silver was changing hands at $31.28 at the time of the MCX closing, whereas the MCX September contract was at Rs 93,837 (LTP), up around 1.20%= per cent on the day.
The US Yields and Dollar
The US Dollar Index, at 104.31, was up nearly 0.10% per cent on the day at the time of the MCX closing as the two-year US yields were steady at 4.45 per cent. However, the ten-year US yields, at 4.1711 per cent, were down nearly 1.30 per cent.
Data and event round up: encouraging US retail sales data
The US data released on Friday showed that the retail sales advance (June) was steady on M-o-M basis (forecast -0.30 per cent), retail sales ex-auto was up 0.40 per cent M-o-M (forecast 0.10 per cent), whereas retail sales control group was noted at 0.90 per cent versus the forecast of 0.20 per cent.
Retail sales data topping the forecasts unexpectedly was bearish for the white metal; however, the precious metals followed the 10-year US bonds higher as the 10-year yields dipped by over 1 per cent despite decent US retail sales data.
Import price Index (June) was hotter-than-expected, though export price index lagged the forecast. The NAHB Housing Market Index (July) came in at 43 versus the forecast of 42. Germany’s ZEW survey expectations (July) data was slightly better than expected.
The US Fed Chair Powell, speaking at the Economic Club of Washington on July 15, said that the trend of inflation in last three months has been encouraging, but he refused to drop any hints about rate cut timings as he said that the Fed will move on meeting-by-meeting basis. Nonetheless, Market participants continue to assign a 93 per cent probability for a September rate cut.
Silver ETF and inventory
Total known global silver ETF holdings stood at 686.657 MOz as of July 15, which is the lowest level since June 18. COMEX silver inventory was at 303 MOz as of July 15, the highest level in nearly 4 years
Upcoming data
Today’s major US data releases include housing starts (June) and industrial production (June). Apart from these data, traders will look forward to the US beige book and Fedspeak as well.
Silver Outlook
Silver is expected to test the $35 mark on rate cut bets. Traders are expected to continue to buy into dips.
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Disclaimer: Praveen Singh is an associate vice president of fundamental currencies and commodities at Sharekhan by BNP Paribas. Views expressed are his own.
First Published: Jul 17 2024 | 10:46 AM IST
