Silver shines brightly ahead of Chinese industrial data
Fawad Razaqzada June 13, 2019 12:21 PM
With interest rate expectations continuing to fall, noninterest-bearing precious metals have been able to shine of late. Concerns over weak growth and tame inflation have helped to boost expectations that central bank monetary policy will remain extremely accommodative for longer than previously expected.
With interest rate expectations continuing to fall, noninterest-bearing precious metals have been able to shine of late. Concerns over weak growth and tame inflation have helped to boost expectations that central bank monetary policy will remain extremely accommodative for longer than previously expected. Many analysts are fully expecting the Federal Reserve to cut interest rates this year, with economists at Deutsche Bank, for example, now forecasting three cuts – at the July, September and December FOMC meetings. Other central banks have likewise turned dovish, most notably the ECB and RBA. Out of the two precious metals, gold has performed better until now given that stocks and base metals had come under renewed selling pressure on US/China trade concerns. But with risk assets finding some support again, silver has been able to shine more brightly over the past couple of days. In fact, with the gold/silver ratio being at extremely elevated levels of around $90, it wouldn’t come as major surprise if the grey metal were to enjoy some bargain hunting soon. However, the immediate focus will now turn to top-tier data from China, one of the biggest consumer nations of precious metals along with India. In the early hours of Friday, the world’s second largest economy will report its latest estimates on retail sales, fixed asset investment and industrial production. Of these, the latter will be the most important one given silver’s dual roles as a precious metal and an industrial material. If industrial production comes in well above the 5.4% y/y rate expected by analysts, then this should help to boost the demand outlook for industrial metals, including silver. Conversely, a number weaker than 5.4% could derail the mini rally. Technical market participants, meanwhile, will have liked the fact that silver has broken its short-term bearish trend line and as price is currently residing above the 21-day exponential. As things stand, therefore, the path of least resistance is to the upside for silver.
Source: Trading View and FOREX.com
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.