ECM: Silver Prices Continue Higher as Markets Stabilize
Silver prices rose steadily Friday, as global markets stabilized on rising oil prices and improved investor sentiment following comments by Federal Reserve Chair Janet Yellen dispelling recession concerns.
Silver for May delivery climbed 4 cents or 0.3% to $15.21 a troy ounce on the Comex division of the New York Mercantile Exchange. The grey metal was on pace for its second consecutive advance. The futures price rebounded sharply Thursday on safe haven demand.
The March 31 close of $15.46 remains the key resistance test. A break above that level would confirm a bullish reversal for the commodity.
Gold futures were little changed Friday morning after rising nearly $14 in the previous session. Comex gold for June delivery was last down 0.1% at $1,236.10 a troy ounce. Platinum prices also held steady near $957.50.
The 30-day gold-silver ratio referenced by the commodities market closed at 81.57 on Thursday. This essentially means that 81.57 ounces of silver are required to purchase one ounce of gold. The ratio was as low as 78.5 in mid-March.
A sense of calm returned to the financial markets after Federal Reserve Chair Janet Yellen dispelled fears that the US economy was heading toward recession. In a panel discussion with former central bank presidents, Ms. Yellen said the economy was on solid course, enough to warrant further interest rate hikes in the future.
“The U.S. economy has continued to progress in a satisfactory way. We continue to see good job performance, some evidence of inflation moving up, so that was our expectation when we raised rates in December,” Ms. Yellen said on Thursday at the International House in New York.
She added, “So yes, there is accommodation in the monetary policy that we have. But we think the gradual path of rate increases will be appropriate. We remain on a reasonable path and I don’t think December was a mistake.”
The minutes of the March 15-16 Federal Open Market Committee (FOMC) meetings confirmed earlier this week that policymakers were leaning against raising interest rates at the April meetings. According to analysts, the central bank is unlikely to raise rates before June.
Global stock markets also received a boost Friday morning on surging oil prices, indicating that investors were warming to the possibility that major producers would agree to freeze production later this month at a key summit in Doha, Qatar.
Oil futures surged 3.5% Friday, with Brent crude futures trading back above $40 a barrel.
European stock markets rebounded sharply after a volatile week. Eurozone benchmark Euro Stoxx 50 Pr was last up 1.4%. Major bourses in London, Paris and Frankfurt rose by at least 0.8%.
US equity futures were also trading higher Friday morning, indicating a strong start to the day. Wall Street’s major benchmarks declined sharply Thursday, with the S&P 500 Index falling back into negative territory for 2016. The Dow Jones Industrial Average also fell 174 points.
In economic data, UK manufacturing production plunged in February, prompting new fears about the country’s uneven recovery.
Manufacturing output fell by 1.1% from January and was down 1.8% from year-ago levels, the Office for National Statistics reported Friday. The reading was well below forecasts, which called for a 0.2% drop.
Industrial output – a broader gauge of factory activity – fell at an annualized rate of 0.5% in February, the biggest decline since August 2013.
Separate data from the ONS also showed that the UK’s trade deficit in February was worse than expected, reinforcing the belief that GDP growth remained subdued in the first quarter.
Separately, Canada’s statistics department reported a surge in employment in March, a sign the oil-hit economy was regaining momentum.
Employers added 40,600 jobs in March, well above forecasts calling for 10,000, Statistics Canada reported Friday in Ottawa.
The unemployment rate fell to 7.1% in March from 7.3%, official data showed.
The economic calendar heats up early next week with inflation data from China, Germany and the UK. The Chinese government will also report on international trade next Wednesday, followed by reports from Washington on producer inflation, retail sales and business inventories.
Meanwhile, the Bank of Canada will also issue a rate decision next Friday. No change to the benchmark lending rate is expected at this time.
