SILVER Analysis
Afternoon: Silver is influenced by traders' reduced expectations for US Federal Reserve rate cuts and tighter supply conditions
Highlights:
- Traders reduce expectations of US Federal Reserve rate cuts, influencing silver prices..
- Silver faces a fourth consecutive year of deficit with inventories at record lows.
- Sell on price jumps around $30.65, targeting $30.10 with a stop loss above $31.00.
Introduction:
Silver prices have recently declined as traders adjusted their expectations regarding rate cuts by the United States Federal Reserve this year. According to the minutes from the Federal Reserve's April 30-May 1 meeting, the timeline to build confidence in inflation reaching the 2% target may be longer than anticipated. Although recent statistics indicate that U.S. inflation is decreasing, several Fed members expressed caution about reducing rates too soon, while also ruling out the necessity for another rate hike.
Supply and Demand Dynamics
Silver is facing its fourth consecutive year of deficit due to tighter supplies. Inventories tracked by the London Bullion Market Association fell to the second-lowest level on record in April. Additionally, trading volumes at the New York and Shanghai exchanges have remained near seasonal lows, indicating reduced supply levels. These factors are contributing to the ongoing supply constraints in the silver market.
Key Economic Data to Watch
Upcoming key economic data that could impact silver prices include:
- German Flash Manufacturing PMI
- German Flash Services PMI
- Euro Zone Flash Manufacturing PMI
- Euro Zone Flash Services PMI
- US Unemployment Claims
- US Flash Manufacturing PMI
- US New Home Sales
These indicators will provide insights into economic conditions in the Eurozone and the US, potentially influencing market sentiment and price movements in the silver market.
Technical Analysis
Support and Resistance Levels
Silver Prices (Spot):
- Support: $29.70
- Resistance: $31.00
Silver MCX Prices:
- Support: ₹91,500
- Resistance: ₹94,500
Trading Strategy
Action: Sell on price increases around $30.65, targeting $30.10, with a stop loss set above $31.00.
Conclusion
The current market environment for silver is influenced by traders' reduced expectations for US Federal Reserve rate cuts and tighter supply conditions. With silver inventories at historically low levels and cautious sentiments from the Federal Reserve, silver prices are likely to remain under pressure. Traders should monitor upcoming economic data releases for potential impacts on silver prices and adjust their strategies accordingly. The recommended action is to sell on price jumps around $30.65, aiming for a target of $30.10 and implementing a stop loss above $31.00.
Support and Resistance Levels:
