Silver: Higher beta rebound with two-way risks – OCBC

OCBC’s Sim Moh Siong and Christopher Wong note that Silver has risen nearly 2%, outperforming Gold’s 1.2% gain on the back of a softer US Dollar (USD) and reduced Fed hike expectations after weak core Consumer Price Index (CPI). They highlight Silver’s higher sensitivity to monetary conditions and risk appetite, expecting larger two-way swings unless Fed tightening expectations ease more sustainably, with key support at 55 and resistance at 61.20.

Outperformance tempered by volatility risks

"Silver rose nearly 2% alongside gold (about 1.2%), supported by the softer USD, some push back in Fed hike expectations after core CPI underwhelmed. The stronger rebound partly reflects silver’s higher sensitivity to shifts in both monetary conditions and investor risk appetite. Near term, silver may outperform gold if the USD and yields extend lower."

"But conviction remains limited as oil-driven inflation risks persist. Without a more sustained easing in Fed tightening expectations, silver is likely to remain prone to larger two-way swings, rather than move into a clean recovery trend. Silver last seen at 58.80 levels."

"Daily momentum and RSI have yet to offer a clean read at this point. Two-way trades likely. Support at 55 levels (recent low year-to-date) before 49."

"Resistance at 61.20 (21 DMA) needs to be taken out for momentum to gain traction. Failing which, silver may well revert to trade near recent lows."