MCX Silver market rise on short covering; Resistance seen at 46305
Commodity Online | September 21 2016
UPDATED 10:31:13 IST

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Silver on MCX settled up 0.21% at 46138 tracking Comex Silver which settled unchanged at $19.14 an ounce, after a near 2 percent increase in the previous session as market is waiting for the outcome of a Bank of Japan policy meeting and FED's meet on Wednesday, with speculation rife that the Japanese central bank will make crucial changes to its easing program.

While the overwhelming consensus is for the Fed to hold rates steady at the conclusion of its policy meeting on Wednesday, some market players expect it to drop a clearer hint that it is ready to raise rates by December. The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced. The Bank of Japan is expected to make negative interest rates the centerpiece of a new policy framework - widely seen as a desperate attempt to show it still has the means to fight chronic stagnation. US Treasuries' yields fell on Tuesday as traders bought longer-dated bonds on uncertainty over whether the Bank of Japan might decide to add more stimulus to boost its economy.

Meanwhile Japan's exports fell 9.6 percent in August from a year earlier, posting an 11th straight month of decline, Ministry of Finance data showed on Wednesday, underscoring sluggish external demand. Technically market is under short covering as market has witnessed drop in open interest by -7.95% to settled at 7702 while prices up 97 rupee, now Silver is getting support at 45911 and below same could see a test of 45684 level, and resistance is now likely to be seen at 46305, a move above could see prices testing 46472.

Trading Ideas:
--Silver trading range for the day is 45684-46472.
--Silver rose as the dollar dropped ahead of a two-day U.S. Federal Reserve meeting that investors are betting will leave interest rates unchanged.
--A range of mixed economic figures and conflicting remarks by key Fed policymakers have kept investors guessing over the timing of the next U.S. rate increase.
--New residential construction in the U.S. pulled back by much more than expected in the month of August, the Commerce Department revealed in a report.

Courtesy: Kedia Commodities