Silver prices witnessed a smart recovery from the seventh month low. Prices recovered nearly five percent from its seven-month low, as a softer dollar and retracement in Treasury yields supported it as per the Silver trading report.
However, yesterday greenback was able to gain 0.81%, highest intraday gain since 2 October 2023, as higher than expected US consumer inflation figures-inspired strong rally. On the other hand, the ongoing conflict between Israel and the Palestinian Islamist group, Hamas, turns out to be a key factor lending some support to the prices. The upside, however, remained limited in anticipation for one more rate hike by the Federal Reserve in 2023.
The US Bureau of Labor Statistics (BLS) reported on Thursday that the headline US CPI rose 0.4% in September and the yearly rate held steady at 3.7% as compared to market expectations for a downtick to 3.6%. Meanwhile, the Core CPI, which excludes volatile food and energy prices, matched estimates and eased to the 4.1% YoY rate in September, hitting a 24-month low. The fact that inflation remains well above the Fd’s 2% target supports prospects for further policy tightening by the US central bank.
Furthermore, concern again mounted after Chinese inflation and trade data for September releases, which once again showed that the Chinese economy continues to struggle. CPI inflation numbers for September slipped back to 0% from 0.1%, while PPI came in at -2.5%, a modest uptick from -3%.
On trade exports for September declined by -6.2%, a modest improvement from -8.8%, while imports declined -6.2%, again a modest improvement on the -7.3% seen in August.
Earlier this week there were reports that the Chinese government was about to embark on a $137bn stimulus package which helped give markets a bit of a lift, followed by reports yesterday that the Chinese sovereign wealth fund has been buying shares in some of the country’s largest banks appeared to show that Chinese authorities were trying to boost confidence in the financial sector.
Technical Outlook – Silver Trading:
Silver prices witnessed a more than 5% recovery rally from the low of 65666. Yesterday, prices closed at 69074 down 0.51%, compared to previous day’s close of 69426.00.
On the above chart, a formation of a bearish engulfing candlestick pattern is indicating a reversal in price action. And it’s expected that any rise towards 70150-70300 levels will attract selling pressure for the downside level 68800-67800 again.
Alternatively, on the upside, massive resistance is seen at 71350 coincided with 50% Fibonacci Retracement level. A break above only prices will extend gains towards 73000-74150.00.
Overall trend expects to remain fragile following the geopolitical, economic jitters. Hence try to catch momentum on every headline.