It was a roller coaster ride for the silver market on the international arena in the month of March. During the first fortnight, CME silver futures were on a positive trend tracking firmness in the gold as well as in anticipation of revival of industrial demand for the white metal. During this period, CME silver futures surged to a 3-week high of $15.65 per troy ounce. Weakness in the dollar against major currencies also attracted investment in the precious metal segment including silver. However, the trend was reversed in the latter part of the month on account of profit booking as well as emergence of selling pressure. Concerns over global economic growth resulted into increased optimism over growth of industrial sector, which led to a fall in the silver prices. Besides, strength in the dollar index pressurised gold, which in turn had its spill-over effect on silver.
ISM non-manufacturing PMI data for February stood at 59.7 against the previous reading of 56.7 and much better than market expectation of 57.4, while new home sales rose by 621,000 in February from 599,000 seen in the previous month. US non-farm payroll for the month of February was an addition of 20,000 against previous reading of 311,000 and market expectation of 180,000. Unemployment rate also dropped to 3.8 per cent from the previous record of 3.9per cent.
US core retail sales for the month of February rose 0.9 per cent MoM against previous reading of -2.1 per cent in January. US core producer price index came at 0.1% against previous number of 0.3 per cent. US new home sales grew by 607,000 against previous number of 652,000 and market expectation of 622,000. US PPI for February stood at 0.1 per cent against earlier number of -0.10 per cent.
US consumer confidence came at 124.1 against market expectation of 132.1 and previous reading of 131.4. The market was holding its breath for release of the final GDP numbers from US for Q4, 2018. The US GDP growth for Q4 2019 at 2.2 per cent was lower than market expectation of 2.4 per cent and previous number of 2.6 per cent.
During its second monetary policy meeting of 2019, the US Federal Reserve maintained status quo on its interest rate and hinted at rate cuts if the situation warranted. This news failed to have a major impact on the bullion market.
The outlook of silver for the month of April is looking gloomy as global markets are running through difficult phases. On one side, uncertainty over Brexit is wreaking havoc in the global market and on other side, positive improvement in Sino-US trade negotiations is supporting prices. In the domestic market, volatility in the Indian Rupee against US Dollar is leading to larger volatility in the Indian silver market.
The author is head of research, Karvy Comtrade