Silver Price News: Silver Seeking Economic Stimulus

Silver staged something of a recovery at the end of last week, despite continued weakness in growth indicators and the US dollar and rate headwinds noted in today’s gold commentary.

However, we note that the medium-term US rate environment remains largely unchanged during the week, with the US 2-Year Treasury yield hovering around 4%.

The market is still digesting the implications of a Chinese stimulus package, with their Minister of Finance suggesting that further fiscal (budgetary) support for the domestic economy might be forthcoming. However, details remain frustratingly scarce. Meanwhile, global economic momentum has improved, led by the US, but on balance remains disappointing, particularly in the Euro Zone. Silver starts this week trading around $31.5/toz.

The most recent CFTC Commitments of Traders (CoT) report published late on Friday suggests that silver speculators slightly trimmed their net long futures positions over the previous week. These now lie c.12% below the 55-month high seen at the end of September, though still consistent with the elevated net long levels seen over the last six months. Conversely, physical silver ETFs/ETCs appear to have seen net inflows at the start of last week, perhaps triggered by bargain-hunting when silver slipped below $31/oz.

Silver is currently negotiating minor descending oblique resistance at $31.48/oz and the 23.61% Fibonacci retracement of the 9 September- 4 October uptrend at $31.72/oz. Beyond this remains strong horizontal resistance at $32.06/oz and minor ascending oblique resistance at $33.74/oz. Tentative support is offered by the 20-day Simple Moving Average at $31.34 /oz, the 38.2%/to Fibonacci retracement level at $30.95/oz and the 50% retracement level at $30.33/oz. Major ascending and major descending oblique support is offered at $29.51/oz and $29.03/oz, respectively. Momentum is weak but improving.

Monday sees publication of the OPEC Monthly Report while Tuesday brings the ECB Bank Lending Survey, August Euro Zone Industrial Production and October Euro Zone Economic Sentiment Index.