Silver Immediate Support Comes At Around 38300-38500/kg

MUMBAI: Silver prices continued witnessing pressure during May month and lost third month in a row, losing more than 2.5% at MCX and half a percent in the international market mainly on back of improved US economic releases and the latest minutes of the Fed meeting showed that they could raise interest rates soon. Bullion prices also traded lower as rally in the world equity markets weighed on the demand pro-spect of the metal as an al-ternate investment. Negative sentiment was also fuelled after the Fed’s minutes rein-forced policymaker’s optimis-tic view on the recovery of the world’s largest economy and further indicated that the Federal Reserve would con-tinue tapering its stimulus measures. While the recent data from the U.S. showed improvement, initial jobless claims for the week through May 17 soared to 326,000 from an upwardly revised of 298,000. Another important figure signaled a rise in exist-ing home sales to 4.65 mil-lion in April from 4.59 million in March, coming below fore-casts of 4.69 million.. The Fed discussed the options of raising short-term interest rates, but this does not mean that an interest rate hike would come any soon, the minutes showed.

However, Silver prices fol-lowed yellow metal firm movement as safe-haven demand that increased amid political crisis in Thailand while the mixed US data encouraged speculations that the Fed would slow the pace of rate hike. These, together with India's ease of import ban, lent support to the yellow metal. In Thailand, Army Chief Prayuth Chanocha announced that the military had taken control of the government, following a six-month political deadlock which has caused to at least 28 deaths and 700 injuries. Curfew was announced na-tionwide and gatherings of more than 5 people are pro-hibited. Media were disal-lowed to report while televi-sion channels were off air. The crisis, together with the ongoing tensions in Ukraine, has raised demand for gold as a safe-haven asset, fol-lowed by silver.

In Ukraine, billionaire Petro Poroshenko won the Presi-dential elections, where he mentioned that he will not hold any talks with terrorists and will send military to the eastern parts to frustrate separatist revolt in 'a matter of hours.' Bullion prices had benefited from the unrest in Ukraine, but now there are some hopes that the country could stabilize after choosing a new President. But the ultimate focus will remain on important U.S. data due in coming days as investors gather cues about the Fed’s monetary outlook.

White metal witnessed its third monthly decline in a row and lost more than 3.5% in the month of May, while pric-es saw marginal losses in the international market of around half a percent. Silver prices are trading below strong support zone of Rs.40000/kg, which is a sign of more weakness in the weeks to come and next im-mediate support comes at around 38300-38500/kg zone. Prices are hovering in a downwards trading channel in both monthly and weekly charts but if we look at the weekly charts at MCX close-ly, prices are declining in a channel within a declining broader channel which con-firms negative biasness to persist for a longer period. Prices in the international charts are also trading below strong support levels around $19/oz, where on the weekly charts the counter is forming a symmetric triangle where a short term bounce back can-not be ruled out, however since prices have given a weekly close below $19/oz the bears are likely to be continue holding grip over the bulls for couple of weeks at least.