Silver futures gain as inflation in the Euro zone, Japan accelerates, weaker dollar

New York (Nov 29)   Silver advanced on Friday supported by rising inflation in the Euro zone and Japan and as overall upbeat data from the two regions pressured the U.S. dollar, boosting demand for alternative investments. Gold, platinum and palladium rose as well. However, speculations for an earlier-than-expected tapering of Fed’s monetary stimulus limited gains.

On the Comex division of the New York Mercantile Exchange, silver futures for settlement in March rose by 1.22% to $19.923 per troy ounce by 11:38 GMT. Prices shifted in a day’s range between session high of $19.985 and day’s low of $19.697, near November 25′s 3-1/2-month low. The precious metal added 0.2% on Thursday and rose back to positive weekly territory on Friday, trimming its monthly decline to 9.1%, still the worst performance since June.

Silver pared its monthly losses after overall upbeat data from Europe and Japan weakened the U.S. dollar, while rising inflation supported precious metals’ demand prospects as a storage of wealth.

Consumer prices in Japan rose in October by a 1.1% annualized rate, meeting both projections and September’s growth and suggesting. Core Consumer Price IndexCalculated by excluding energy and food products from the Consumer Price Index. Examines the weighted average of prices of a basket of consumer goods and services. It is calculated by taking price changes for each item in the basket and averaging them, weighting them according to the item's importance. Calculated on both annual and monthly basis., which excludes the volatile food and energy expenditures, also matched projections and jumped by 0.9%, exceeding the preceding month’s 0.7% advance.

The Asian nation’s unemployment ratePercentage of the total workforce who are unemployed and are actively looking for employment. All employed and unemployed people are included in the workforce category. One who is not classified as employed or unemployed is excluded from the statistics, which this indicator tracks. One counts as unemployed if he falls in all of the following categories: unemployed for the last week; able bodied; has been seeking employment for a period of at least four weeks, which end in the week when the research is being conducted. People who have been laid off and are awaiting to be rehired are also counted as unemployed. remained unchanged at 4.0% last month, mismatching projections to inch down to 3.9%.

A gauge measuring investment activity in Japan’s housing sector marked a better-than-projected reading. Year-on-year, housing startsTracks statistics about the construction of single-family houses, which has just begun, marked by excavation works or laying the foundations of the building. Data from every single part of the country is compiled and it also includes overhauls of buildings, which lie on existing foundations. rose by 7.1% in October after they jumped by 19.4% a month earlier, beating forecasts for a 5.0% advance.

In Great Britain, the Nationwide House Price Index (HPI) met expectations and jumped by 0.6% in October after posting at 1.0% in September. Year-on-year, prices of homes with mortgages backed by Nationwide rose by 6.5%, outperforming both projections and the preceding month’s gains of 6.2% and 5.8% respectively.

In the Euro zone, Germany’s retail salesTracks the changes in retail sales' volumes. Information is gathered through a research including big retailers and an excerpt for the smaller ones. Higher volumes mean higher consumer demand, increased production and economic growth. Calculated both on a monthly and annual basis. disappointed by contracting by 0.8% in October, confounding expectations for a 0.5% advance following September’s upward revised 0.2% decline. On an annual basis, retail salesTracks the changes in retail sales' volumes. Information is gathered through a research including big retailers and an excerpt for the smaller ones. Higher volumes mean higher consumer demand, increased production and economic growth. Calculated both on a monthly and annual basis. in the leading EU nation fell by 0.2% after advancing by 0.2% a month earlier, defying projections for a 1.5% gain.

A separate report showed inflation picked up in the Euro zone and exceeded expectations, while the unemployment ratePercentage of the total workforce who are unemployed and are actively looking for employment. All employed and unemployed people are included in the workforce category. One who is not classified as employed or unemployed is excluded from the statistics, which this indicator tracks. One counts as unemployed if he falls in all of the following categories: unemployed for the last week; able bodied; has been seeking employment for a period of at least four weeks, which end in the week when the research is being conducted. People who have been laid off and are awaiting to be rehired are also counted as unemployed. declined. Year-on-year, the single currency bloc’s Flash Harmonized Index of Consumer Prices advanced by 0.9% in November after creeping at 0.7% in the previous two months. Analysts expected prices to have risen by 0.8%.

Core consumer prices, which exclude the volatile costs for food, energy, alcohol, and tobacco, also surprised positively and rose by an annualized 1.0%, beating projections for a 0.9% advance and the preceding month’s 0.8% gain.

Another source for positive sentiment was a retreat in the unemployment ratePercentage of the total workforce who are unemployed and are actively looking for employment. All employed and unemployed people are included in the workforce category. One who is not classified as employed or unemployed is excluded from the statistics, which this indicator tracks. One counts as unemployed if he falls in all of the following categories: unemployed for the last week; able bodied; has been seeking employment for a period of at least four weeks, which end in the week when the research is being conducted. People who have been laid off and are awaiting to be rehired are also counted as unemployed. from last month’s record high reading. Unemployment fell to 12.1% in October, beating expectations to remain unchanged at 12.2%.

The U.S. dollar index, which measures the greenback’s performance against a basket of six major currencies, traded at 80.57 at 11:21 GMT, down 0.08% on the day. Prices shifted in a day’s range between 80.63 and 80.52. The December contract lost 0.1% on Thursday and extended its weekly decline to nearly 0.2%. Weakening of the greenback makes commodities priced in it cheaper for foreign currency holders and boost their appeal as an alternative investment.

Gains however remained limited as a recent string of overall upbeat U.S. data reinforced the case for an earlier-than-expected Fed stimulus tapering. The Labor Department reported on Wednesday that the number of Americans who filed for initial unemployment benefits fell by 10 000 to a two-month low of 316 000 in the week ended November 23, defying analysts’ projections for an increase to 330 000. Applications for the previous week were revised up by 3 000 after being initially estimated at 323 000.

The Federal Reserve revealed last week that it might be trimming the record-high stimulus “in the coming months”, if the economic recovery starts moving in the right direction. Fed minutes showed that policy makers “generally expected that the data would prove consistent with the committee’s outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pace of purchases in coming months.”