Silver Price News: Silver Weathers Weak China Data

Like Gold, Silver also has a better day on Friday, adding c. $0.6 an ounce to the resistance level of $29.5 and a weekly gain of $0.4 (+1.1%). Today’s early trading sees silver trending back down towards $29 per ounce.

The large, and somewhat anomalous downward shift in US rate expectations seen at the end of last week has already been detailed in today’s gold commentary. As a non-yielding asset, such a move will have been a support for Friday’s rally although silver has historically been less interest rate sensitive than the yellow metal, as the latter is overwhelmingly used for various forms of investment.

Real (industrial) demand for silver is also an important driver for silver prices and in this respect Friday’s soft Michigan Consumer Sentiment flash estimate for June might be considered something of a mixed blessing, while the disappointing China lending data for May released earlier in the day, was undoubtedly silver bearish.

Overnight we have seen further disappointing data in the form of slower than expected China industrial production for May, together with data which re-affirms the problems facing China’s property sector. These remain consistent with a broader picture of falling global economic momentum. Chinese economic data is particularly pertinent as it is the world’s single largest consumer of silver and has a c. 80% global market share of the photovoltaic market.

In addition to the above, the market calendar for the early part of the week includes US Industrial Production and Retail Sales for May and the EU’s ZEW Economic Sentiment Index for June, all expected on Tuesday.