SILVER TODAY – Gains are hard fought

Analysis

• Silver is under downside pressure so far today, breaking recent support from the 40 DMA at $18.31 per oz.
• Longer lower shadows on Thursday’s and Friday’s candlestick formations suggests similar pressure was well received.
• But the stochastics have crossed lower.
• Support below is seen at the 20 DMA ($17.79).
• Additional UTL support is expected at $17.66 from the year-to-date rally.    
• The 200 DMA should also provide support at $17.54, but a break lower would signal a test of $16.56 – the 61.8% Fibo of the year-to-date rally.

Other factors

Risk sentiment has been given a solid boost overnight after the FBI cleared Hillary Clinton of wrong-doing in its latest email probe. The US presidential election will be key to short-to-medium-term direction. A Clinton victory is deemed negative for silver in the short term because it maintains the status quo but markets will be mindful of the accuracy of opinion polls following the UK’s Brexit vote.

Net length among Comex speculators increased for the first time in five week to stand at 62,136 contracts in the week to November 1. The rise was led by a sizeable 8,043 contracts of short covering, but the fact speculators also carried out 2,980 contracts of long liquidation suggests fund/CTAs are becoming less bullish.

Investment demand has proved solid into the correction:

• ETF holdings stand at 669.2 million oz (basis the funds we monitor), down from a recent record of 674.4 million oz following recent liquidation from the US-listed iShare platform.
• Retail investment demand has slowed as prices have strengthened. American Eagle coin sales are running at a 1.2 million oz pace so far in November. Sales accelerated to 3.8 million oz in October compared with a rolling three-month average of just 1.4 million oz.