SILVER Analysis
Afternoon: Silver Prices Experience Volatile Week as Market Reacts to Macro Factors
Highlights:
- Silver prices fluctuated significantly due to overseas copper prices and market liquidity.
- Companies faced margin pressure, leading to inventory sell-offs while spot market transactions weakened.
- High prices encouraged scrap silver sales, but demand for jewellery and other industries declined
Introduction:
Last week, the silver market experienced substantial fluctuations influenced by various factors, including overseas copper prices, market liquidity, and macroeconomic news. This report provides an in-depth analysis of these events and their impact on the silver market, offering insights for traders and industry stakeholders
Market Dynamics
- Significant Fluctuations: Silver prices saw notable volatility, primarily driven by fluctuations in overseas copper prices and shifts in market liquidity. The initial surge in silver prices created margin pressures for companies, leading some to liquidate inventory to manage risks.
- Price Movements: The market experienced a continuous upward push in silver prices early in the week, culminating in a sharp drop on Thursday. This volatility was exacerbated by bearish news and hawkish statements from US Federal Reserve officials, prompting a rapid exit of bullish positions from the market.
- Inventory and Spot Prices: Facing margin pressures, many companies opted to sell off their inventory. Despite the volatility, some companies managed to keep spot prices relatively stable with lower discounts. Downstream companies, anticipating further price drops, largely adopted a wait-and-see approach, further weakening spot market transactions by mid-week.
- Transaction Volume: By mid-week, transactions in the spot market had weakened significantly as traders hesitated amid falling prices. However, by Friday, prices began to stabilize, although the demand for silver jewellery and other industries remained subdued due to the preceding price fluctuations.
- Scrap Selling: The elevated silver prices motivated companies holding scrap silver to sell actively, capitalizing on the high prices despite the overall market uncertainty.
Technical Analysis:
Silver prices are expected to find support at 30.75 and face resistance at 32.17. For Silver MCX, support is anticipated at 92455 and resistance at 95770
Given the recent stabilization, a strategic buy at 31.50 with a stop loss set at 30.75 and a target of 32.17 is suggested. This approach balances potential gains with controlled risk, aligning with observed market conditions.
Conclusion
The silver market's volatility last week was significantly influenced by external factors such as overseas copper prices and macroeconomic news. While the initial surge put pressure on companies, leading to inventory sell-offs, the market showed signs of stabilization by week's end. Traders should remain cautious, leveraging technical analysis to guide their positions.
Support and Resistance Levels:
