MCX Silver market under short covering
Commodity Online | September 02 2016
UPDATED 10:51:47 IST

MCX Gold under short covering; Resistance seen at 49465

MCX Silver under long liquidation; Support seen at 65712

MCX Crude Oil under fresh selling; Support seen at 3781

MCX Natural Gas under long liquidation; Support seen at 176.7

MCX Copper under fresh selling; Resistance seen at 614.8

Silver on MCX settled up 0.84% at 45179 as investors cover their short position looked ahead to data on US non farm payrolls on Friday to see if the economy is strong enough to withstand a rate hike in the coming weeks. The consensus forecast is that the data will show jobs growth of 180,000 in August, following an increase of 255,000 in the preceding month.

A strong non farm payrolls report would reinforce the view that a U.S. rate hike in September may be on the cards, after hawkish signals from senior Fed officials in recent days revived speculation of a near-term rate hike. A day earlier, prices slipped after better-than-forecast private sector U.S. employment data added to speculation that the Federal Reserve is gearing up to hike interest rates at its September meeting.

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. According to Fed Rate Monitor Tool, investors are pricing in a 27% chance of a rate hike by September. December odds were at around 56%.

Now market players are also looking ahead to Friday’s non farm payrolls report, which could determine whether the Fed raises rates in September. Technically market is under short covering as market has witnessed drop in open interest by -0.37% to settled at 8293 while prices up 377 rupee, now Silver is getting support at 44798 and below same could see a test of 44418 level, and resistance is now likely to be seen at 45448, a move above could see prices testing 45718.

Trading Ideas:
--Silver trading range for the day is 44418-45718.
--Silver gained as prices remained supported after data showing a fall in U.S. manufacturing activity pressured the dollar
--U.S. data showed initial claims for state unemployment benefits rose less than expected last week, pointing to sustained labor market strength.
--U.S. factory activity contracted in August for the first time in six months as new orders and production tumbled.

Courtesy: Kedia Commodities

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