Silver price climbed over three percent on Thursday, extending recent gains in the lead up to expected interest rate cuts from major central banks next week after U.S. data signaled a slowing of the economy.
MCX Silver prices rose to 87095, up 3.13%, while Comex at $30.105, up 4%.
The dollar drops nearly 0.40% to 101.16 following the yesterday data. Including, Initial claims for state unemployment benefits which rose 2,000 to a seasonally adjusted 230,000 for the week ended Sept. 7, weighted the precious metals strongly.
Wholesale goods prices were unchanged in August after rising 0.6% in July. Energy prices dropped 0.9%. Food prices gained 0.1%. Core goods prices climbed 0.2% after a similar advance in July. The narrower measure of PPI, which strips out food, energy and trade, rose 0.3%, matching July’s gain. The so-called core PPI increased 3.3% year-on-year after climbing 3.2% in July.
Based on the CPI and PPI data, economists’ estimates for the PCE price index, excluding the volatile food and energy components, ranged from an increase of 0.14% to 0.18% in August. Core PCE inflation rose 0.2% in July.
Core inflation is forecast to have advanced 2.7% year-on-year in August after rising 2.6% in July. The anticipated rise in annual core inflation would be the result of last year’s low readings dropping out of the calculation.
The Federal Reserve is also anticipated to start easing policy when it meets next week and is expected to deliver a smaller 25 basis point rate cut following a mixed US inflation report for August. Elsewhere, investors continued to assess the demand outlook in top consumer China following a mixed set of economic data, as well as trends in the renewable energy sector which utilizes silver in solar panels.
Further, the euro rose against the dollar on Thursday after the European Central Bank lowered interest rates and ECB president Christine Lagarde dampened expectations for another cut next month, saying the bank will let economic data dictate the next policy move, The European Central Bank is widely expected to lower rates again on Thursday, while markets will look for clues on whether the ECB will leave the door open to cuts in October and December as well. The ECB lowered its deposit rate to 3.5%, as widely expected. The refinancing rate, however, was cut by a much bigger 60 bps to 3.65% in a long-flagged technical adjustment
Technical Outlook of Silver Price
Silver prices surged over 3% yesterday, hitting a high of 87,300, the highest level in two months, before settling at 87,095, compared to the previous day’s close of 84,450.
A long bullish candlestick formation indicates bullish momentum in the near future. Additionally, the price breakout from a bullish consolidation range supports further upward movement.
Therefore, any dip towards 86,050–85,950 is likely to attract buying interest, with prices potentially rising towards 88,050–88,750 in the near term.
On the downside, immediate support is seen at 85,550, and a break below this level could lead to a retreat towards 84,950–84,250.
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Commodity Samachar Securities
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