Dovish Fed View Boosting Silver
Silver prices are ending the week firmly higher with the futures market once again testing the 54.4433 level which has capped price action twice so far this year. The move higher comes despite a lack of accompanying bullish momentum in gold. A dovish repricing in traders’ Fed rates outlook is certainly helping underpin metals with the market now widely expecting a rate cut at the December FOMC. Pricing for a fresh cut next month has jumped to around 85% from less than 40% at the start of last week, driving a rebound in risk assets across the board. While this has diluted safe-haven demand for metals, a weaker USD has kept both gold and silver supported though it is silver which has emerged as the winner this week.
Chinese Inventories Plunge
The rally in silver looks mainly linked to news this week that Chinese silver inventories have fallen to 10-year lows following large deliveries to London this year. In October, silver exports from China hit record highs of 660 tonnes, fuelling the price squeeze we’re currently seeing. With a softer US/more dovish Fed outlook accompanying the move, silver prices look poised for further upside near=term with breakout risks eyed. Looking ahead, any fresh US data weakness should act as a catalyst for another leg higher in silver as we move towards the December FOMC.
Technical Views
Silver
The correction lower in silver found strong support into a retest of the broken bull channel highs and the 49.5217 level. Price has since turned higher again is now once again testing the YTD highs around the 54.4433 level, which has acted as resistance twice this year. If bulls can breach this level we could see another leg higher in silver ahead of year end. However, bearish divergence in momentum studies is worth noting here particularly if we see any reversal patterns forming.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.