MCX Silver market rise on short covering; Support seen at 43790
Commodity Online | August 30 2016
UPDATED 10:32:42 IST

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Silver on MCX settled up 0.89% at 44367 as prices recovered as investors looking for bargains stepped in to buy up the precious metal. Investors will be keeping an eye on upcoming U.S. data to gauge if the world's largest economy is strong enough to withstand a rise in borrowing costs in the weeks ahead. The Commerce Department said in a report Monday that the core PCE price index inched up 0.1% last month, matching expectations.

On an annualized basis, core PCE prices rose 1.6%, broadly in line with forecasts. The Federal Reserve uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below. The report also showed that personal spending increased by 0.3% last month, while personal income advanced 0.4%. Data sets from Japan showed noted improvement as investors looked ahead to non farm payroll figures in the U.S. at the end of the week for a clearer view of a possible Fed rate hike this year.

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. Holdings at ishares silver trust gained by 0.27% i.e. 29.54 tonnes to 11130.20 tonnes from 11100.66 tonnes.

Hedge funds and money managers cut their net long position in COMEX silver contracts in the week to Aug. 23. Technically market is under short covering as market has witnessed drop in open interest by -8.84% to settled at 7804 while prices up 390 rupee, now Silver is getting support at 43790 and below same could see a test of 43214 level, and resistance is now likely to be seen at 44711, a move above could see prices testing 45056.

Trading Ideas:
--Silver trading range for the day is 43214-45056.
--Silver gains as prices recovered as investors looking for bargains stepped in to buy up the precious metal.
--The Fed is getting closer to raising interest rates again, the head of the U.S. central bank, Janet Yellen, and other policymakers said.
--Holdings at ishares silver trust gained by 0.27% i.e. 29.54 tonnes to 11130.20 tonnes from 11100.66 tonnes.

Courtesy: Kedia Commodities