Passage of the latest US stimulus bill has increased the possibility of the inflation risk and is keeping precious metals prices at elevated levels. Precious metals are used as a hedge against inflation.
Silver was trading yesterday near $25.96, which was marginally higher from the previous day’s low of $25.42; however rising bond yields are likely to keep precious metals under check.
US economic optimism has increased after President Joseph Biden signed the $1.9 trillion recovery package which is positive for industrial metal demand, albeit inflation expectation has increased. The 10-year breakeven inflation expectations rate Friday rose to a 7-year high of 2.304% before falling back slightly.
On the economic data front, The University of Michigan's March U.S. consumer sentiment index rose +6.2 to a 1-year high of 83.0, against expectations of 78.5. Also, Eurozone Jan industrial production rose +0.8% m/m, against expectations of +0.5% m/m U.S. Feb core PPI rose +2.5% y/y, the largest increase in 1-3/4 years against expectations of +2.6%.
According to the CFTC Commitments of Traders report released on Mar. 9, net long for silver futures dropped by 3467 contracts to 36,149 for the week. Speculative long position reduced by 3480 contracts, while shorts dropped by 13 contracts.
Silver prices are likely to find support around $24.24 and $23.50 while key resistance level is seen around $27.38 and $28.21.