Gold News

Silver Prices Sink 3.9%, "Vulnerable" Near $19 as US GDP Data Follow 2nd Fed Taper

SILVER PRICES sank towards 9-week lows Thursday lunchtime in London, as New York stock markets rose and European shares reversed earlier losses following new economic data from the US.
 
The Bureau of Economic Analysis' first estimate of Q4 2013 GDP said the US economy grew 3.2% annualized between October and New Year's, matching Wall Street forecasts.
 
Ending what one precious metals analyst this morning called "an orderly recovery" in January, gold prices dropped 2.5% from an overnight top at $1270 – last Friday's finishing level, and the best weekly close in 10 – hit after the US Federal Reserve voted to "taper" another $10 billion from its monthly QE money printing as expected.
 
Wholesale prices for large silver bars fell just 3c above $19 per ounce, which excluding the brief down-spike of New Year's Eve marked its lowest level since Dec. 4th.
 
"Silver has seen very good support in the $18.50 to $19.00 range since June last year," says Walter de Wet at Standard Bank's commodities unit in London – acquired today by the world's largest bank, fellow London Bullion Market Association member ICBC of China.
 
But "we believe that China’s silver inventory levels remain high," de Wet goes on, "possibly up to 15 months’ worth of fabrication demand."
 
Silver alone of the major precious metals has failed to see rising imports to China, while overnight data showed China's manufacturing activity shrinking for the second month running.
 
This "slowdown...should impact on silver negatively," says Standard Bank's note. "But we would probably need gold to move lower before silver could really test support at $18.50."
 
With China's gold trading now closed for New Year holidays, gold premiums above London prices also slipped in India on Thursday, dropping to $80 per ounce on weak demand according to Reuters.
 
Price in London's bullion market then bounced $5 from the 1-week low of $1238 hit at the start of US trade.
 
Silver prices "remain vulnerable," says a technical analysis from Swiss investment and London bullion bank UBS, for as long as the metal trades below the downtrend "drawn by connecting the August/October 2013 highs, which intersects today at $20.13."
 
Writing ahead of Thursday's 3.9% slump to $19.03, "a breach of $19.32 would expose the critical $18.23 low of June 2013," says UBS.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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