Silver Rallies On Safe-Haven Demand Amid Us Bank Worries

  • Commodities Analysis
  • Editors Pick
AJAY KEDIA

Silver yesterday settled up by 5.98% at 66652 as the dollar weakened as investors fretted over the largest U.S. bank failure since the 2008 financial crisis. The market turmoil from the Silicon Valley Bank collapse led traders to pare bets on the scope for further Fed policy tightening. Goldman Sachs (NYSE: GS ) analysts said they no longer expect the Federal Reserve to raise rates by 25 basis points at its next policy meeting on March 21-22. The number of unemployed people increased by 242 thousand to 5.94 million and employment levels rose by 177 thousand to 160.32 million.

Fed Chair Powell told the US Congress that the ultimate level of interest rates could be higher than anticipated in light of strong economic data and that the central bank would be prepared to increase the pace of tightening if needed. After the NFP release, expectations eased about the need for higher interest rates. The market is now pricing a 50/50 chance of the Fed raising rates by either 25bps or 50bps this month, compared to a better-than-even chance of a 50bps increase earlier. Support is also seen amid tight supplies, with inventories at the LBMA and COMEX remaining at low levels. Additionally, new data revealed reserves by major producers, Peru, dropped by 22,000 tonnes to 98,000 in 2022.

Technically market is under short covering as the market has witnessed a drop in open interest by -13.08% to settle at 13338 while prices are up 3762 rupees, now Silver is getting support at 64410 and below the same and could see a test of 62168 levels, and resistance is now likely to be seen at 67832, a move above could see prices testing 69012.

Trading Ideas:
# Silver trading range for the day is 62168-69012.
# Silver rallies on safe-haven demand amid us bank worries
# The market turmoil from the Silicon Valley Bank collapse led traders to pare bets on the scope for further Fed policy tightening.
# Goldman Sachs said they no longer expect the Federal Reserve to raise rates by 25 basis points at its next policy meeting on March 21-22.

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