Silver Analysis
Afternoon Session: Silver Surges 4% in Anticipation of June Rate Cut: Global Demand and Supply Dynamics in Focus
Highlights:
- U.S. silver prices rallied over 4% within a week, fueled by expectations of a potential rate cut in June.
- Global silver demand is projected to rise by 1%, driven by record industrial demand and resurgence in jewelry consumption.
- Technical indicators, including MACD, Ichimoku, Moving Averages, and RSI, suggest a bullish trend with favorable buying conditions.
Overview:
Silver prices experienced a robust surge of over 4% within a week, propelled by heightened expectations of a potential interest rate cut in June. This surge was triggered by concerning indicators in the U.S. economy, including a slowdown in manufacturing activity and a decline in consumer sentiment observed in February.
Key Federal Reserve officials, including New York Fed President John Williams and Atlanta Fed President Raphael Bostic, emphasized a cautious approach to monetary policy adjustments. While Williams hinted at potential interest rate cuts contingent upon incoming data, Bostic underscored the central bank's vigilance against inflation. Other officials, such as Boston Fed Bank President Susan Collins and San Francisco Fed President Mary Daly, acknowledged the likelihood of policy easing later in the year, despite persistent challenges in reaching the 2% inflation target.
On the global front, silver demand is forecasted to increase by 1%, driven by a projected record high in industrial demand and a resurgence in jewelry and silverware consumption. Industrial demand is expected to surge by 4%, contributing to a record 690 million ounces, building upon the previous year's peak. India, in particular, is anticipated to witness a significant rise in silver jewelry fabrication, contributing to a record 6% increase in worldwide consumption.
However, silver investment is projected to decline by 6%, influenced by gains in the U.S. stock market. On the supply side, total global silver supply is estimated to grow by 3% to 843 million ounces in 2024, reaching an eight-year high of 1.02 billion ounces. This growth is primarily driven by a recovery in mine output, despite expectations of a 3% decrease in recycling volumes due to reduced jewelry and silverware scrap supply.
Technical Analysis:
From a technical analysis perspective, various indicators, including MACD, Ichimoku, Moving Averages, RSI, and Choppiness, signal a bullish trend with favorable buying conditions. However, traders should exercise caution as the Vortex Indicator displays a bearish crossover, indicating the potential for a downturn in market momentum. The Choppiness Index suggests elevated volatility, urging traders to adjust risk management accordingly.
Conclusion:
In conclusion, the silver market appears to be in a bullish phase, with the potential to test Rs. 75,000 per Kg. Strong support is expected at Rs. 68,000 per quintal in the coming weeks, offering valuable insights for investors and traders navigating the dynamic silver landscape.
Support and Resistance Levels:
