Silver Price Today: Bearish; check key support, resistance levels | commodities

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3 minutes to read Last update: 09 October 2024 | 9:27 AM IST

Silver has fallen sharply as commodities tumble across the board

Silver Performance

Silver prices fell to their lowest level since September 19 on Tuesday as the commodity fell on a host of bearish developments.

The sell-off in commodities, which began in the Asian session shortly after China’s CNDR (National Development and Reform Commission, China’s economic planning agency), picked up pace in the US session.

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NDRC briefings failed to provide details on the long-awaited additional fiscal stimulus. According to NDRC announcements, the Chinese authorities will this year advance $14 billion in the central government in the 2025 budget and add another $14 billion in spending on key strategic areas this year as they accelerate spending, largely keeping plans to investment stimulation. In addition, the country will continue to issue ultra-long sovereign bonds next year to support project spending.

Investors, hoping for further policy action, were sorely disappointed. Almost all metals and energy counters tumbled on concerns over Beijing’s determination to prop up the nation’s ailing real estate sector and ailing economy.

China’s conservative fiscal stance may reflect debt concerns. However, announcements of more stimulus are expected as China’s economy is caught in a deflationary spiral, and officials at last month’s Politburo meeting sounded quite supportive.

Aside from disappointments on the Chinese stimulus front, the impact of solid US payrolls released on Friday continues to weigh on commodity and bond markets, keeping US yields high as the likelihood of a 50bp rate cut has faded.

Limited geopolitical tensions also weighed on the metal as Israeli retaliation against Iran is expected.

Spot silver was trading at $30.35, down nearly 4% on the day. The December MCX contract at Rs 88,710 was down 3.95%.

US dollar and yields:

The US dollar index, which just a few days ago was on the defensive at the crucial 100 support level, rose to 102.57. US ten-year yields at 4.03% were up 1bp, while two-year yields at 3.96% were down nearly 1%.

ETF Holdings:

Total known silver ETF holdings as of October 7 were 724.495 Moz, the highest weekly level since April 5. The COMEX silver inventory level was seen at 305.873 Moz.

geopolitical clock:

Overall, the situation is somewhat contained as Israel’s response is awaited, although fighting continues to develop in the Middle East. Israel expanded its ground operation in Lebanon and Hamas launched rockets into Israel. Hezbollah is said to support the ceasefire attempts, although Israel has warned that Lebanon faces “Gaza”-like destruction. Israel’s defense minister will travel to Washington as Israel has warned that retaliation against Iran will be significant.

Outlook:

In the absence of any major escalations in geopolitical tensions and lack of details on China’s stimulus, the metal may be trading bearish, although it appears oversold at current levels.

US CPI data (September) to be released today; however, the US non-farm payrolls report made the inflation data largely redundant, unless the readings turn out to be uncomfortably higher. US yields will remain firm in the near term, which would support the US dollar.

The white metal has support at $30 (Rs 87,600)/$29.55 (Rs 86,300). Resistance is at $31 (Rs 90,600)/$31.45 (Rs 92,000).

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Disclaimer: Praveen Singh is the Associate Vice President of Fundamental Currencies and Commodities at Sharekhan by BNP Paribas. The opinions expressed are his own.

First publication: 09 October 2024 | 9:22 AM IST

Vaseline3 days ago

0 2 minutes read