Silver Price News: Silver awaits China’s Pivot

Like Gold, Silver also seems to be rangebound this week, largely moving between $29.0/toz to $29.6/toz, suggesting a consolidation awaiting further catalysts. However, a longer-term stance might view silver as being in a falling channel since late May, currently bound by $28.3/toz-$30.8. Today’s early trading sees silver trending back down towards $29.4/toz.

We have already noted in our gold report that interest rate indicators such as 2-Year and 10-Year US Treasuries, US Fed Funds Futures and the US Dollar have all been mildly supportive thus far this week following a big Friday move. However, with reference to recent incoming data, weak China Industrial data, weak German Economic Sentiment and weak Japan manufacturing continues to suggest slowing momentum. The significant deficit in the silver market does provide a buffer, however.

Against this backdrop, it is interesting to note the current high premia that silver is attracting in China, which is generally indicative of particularly high physical demand. While it is possible that this is being generated by elevated investment during a period of high gold prices and a lull in central bank purchases, it is equally likely that the source of demand is industrial.

Such a development might well foreshadow a significant change in China’s economic policy which is due to be unveiled at the Chinese Communist Party’s long-delayed Third Plenum (meeting) in July. Public statements by senior Chinese leadership, including President Xi, suggests that this will pivot Chinese industrial policy back towards exports with a focus on clean energy, electric vehicles, battery technology, semiconductors, computing, artificial intelligence, and robotics.

Events in the market calendar for silver investors includes Japan Tankan (industrial) Index for June (already mentioned) and UK May inflation data and Bank of Canada minutes later today. For Thursday, a Bank of England UK interest rate decision and US Initial Jobless Claims are focal points.