Silver prices rally amid bullish Chinese industrial output numbers
Silver prices rally amid bullish Chinese industrial output numbers
Silver prices are up by 1.18% to trade at $24.10.
NBS has released bullish data on China's industrial production.
Silver's appeal as a store of value has risen amid the hopes of the US stimulus package.
Silver prices have risen as the precious metal’s appeal as a store of value heightens. Additionally, China’s bullish industrial output data has contributed to the rallying of the commodity’s price. On a 2-hour chart, silver is up by 1.18% to trade at $24.10.
silver prices
China releases bullish industrial output numbers
Silver is an industrial metal. Furthermore, China is a major consumer of the commodity. Consequently, data on the country’s industrial sector is of interest to those who are keen to trade silver.
On 15th December, China’s National Bureau of Statistics (NBS) released data on China’s industrial production YoY. According to the agency, the value of industrial output has increased by 7.0%. The figure matches the forecast, and represent an increase from the previous 6.9%.
On a year-to-date basis, November’s Chinese industrial production rose by 2.3% compared to the preceding month’s 1.8%. These numbers are good news to bulls in the market; an aspect that has resulted in the rallying of silver prices.
At the same time, the market is reacting to numbers on retail sales in the Middle Kingdom. According to the NBS, November’s retail sales YoY improved from the previous 4.3% to 5.0%. However, it missed the analysts’ forecast of 5.2%. For the year to date, November’s retail sales rose from October’s -6.83% to -5.75%. The rise of retail sales in a country that is among the top silver consumers denotes increase in the metal’s demand.
Silver’s prices rally as its appeal as a safe haven rises
Silver prices are also rallying due to the rise in its safe haven appeal. Its value as a precious metal is similar to that of gold. The price of the latter metal has risen by 0.39% to trade at $1839.25. Investors consider both commodities as a hedge against fiat currencies that tend to be unstable.
Today, investors have shifted their focus to precious metals as US market indices trade lower. The Dow Jones is down by 0.62% while S&P 500 has declined by 0.44%. Similarly, the US dollar index dropped by 0.01% to trade at $90.64.
News on the US stimulus package have also contributed to the demand of silver as a store of value. On 14th December, a group of bipartisan US lawmakers presented 2 bills aimed at availing an emergency economic relief. One of the bills includes a $748 billion stimulus package.
As the bipartisan group showed progress, congressional leaders are hopeful about the approval of an economic relief package prior to the Christmas recess.
Is Gold a buy or sell in December?
If the price jumps above $1850, it would be a signal to buy Gold, and we have the open way to $1900
The attention of investors is focused currently on the U.S. stimulus
Nancy Pelosi said that negotiations over a coronavirus stimulus could run through the holiday period
Gold price remains supported by uncertainty over the global economic future, but this precious metal is still not able to surpass $1900 resistance. While the markets may continue welcoming upbeat vaccine news, rising Covid cases and the ongoing delay in U.S. fiscal stimulus could keep gold prices afloat.
Fundamental analysis: Fed will expand its economic stimulus
The price of Gold extended its correction from the recent highs above $1870 but despite this, gold price remains in an uptrend according to technical analysis. The Food and Drug Administration authorized the Pfizer-BioNTech coronavirus vaccine for emergency use in the U.S. last week, and some analysts say that this could change the positive trend of Gold.
This announcement is excellent news for humanity, but we still don’t know how effective the vaccine is in the longer term. The vaccine requires two doses that are taken 21 days apart, and it is important to say that Pfizer’s vaccine must be stored at a temperature of about -70°C.
The main problem with this is transportation and distribution, so there is still a long way to go before widespread vaccination. These indicate that the pandemic will not stop in the upcoming months, and any bad information on the pandemic will support this precious metal.
The U.S. surpassed the 16 million coronavirus cases on Saturday, and the country still needs to face the COVID-19 challenge. From the fundamental perspective, this will force the Fed to expand its economic stimulus, which is positive news for gold price.
Investors’ attention is focused currently on the U.S. stimulus, they are convinced that the U.S. stimulus is on the way, but the only question is how much and when.
Nancy Pelosi said last week that negotiations over a coronavirus stimulus package could run through the holiday period, but this is too late according to some analysts. “At this point, markets have priced in and are expecting stimulus near term, so if that really does not happen by the 18th (the new budget deadline) that will be a mild headwind for risk assets”, said analyst Tom Essaye.
Technical analysis: Bears are focused on breaking the support level at $1800
Gold price remains in the bull market, and as long the price is above $1800 support, there is no risk of the trend reversal.
The current resistance levels are $1850 and $1900; $ 1800 and $1750 represent the critical support levels. If the price jumps above $1850, it would be a signal to buy Gold, and we have the open way to $1900.
On the other side, if the price falls below $1800, it would be a firm “sell” signal, and we have the open way to $1750.
Summary
Gold price remains in the bull market, and as long the price is above $1800 support, there is no risk of the trend reversal. The U.S. surpassed the 16 million coronavirus cases on Saturday, and the country still needs to face the COVID-19 challenge. From the fundamental perspective, this will force the Fed to expand its economic stimulus, which is positive news for gold price.