Silver market rises on short covering, open interest drops 9.24%
Mumbai-India (Mar 13) Silver settled up 1.9% at 46771 hitting a near six-month high as fears of more corporate defaults in China and the geopolitical tug-of-war between Russia, Ukraine and the West boosted bullion's appeal as an insurance against riskier assets. Also China's first bond default and weak data on exports have stoked concerns about the health of the world's second-biggest economy, sending London copper prices to their lowest in 44 months. Copper is often put up as collateral for lending. Fears that China's economy, the world's second largest after the United States, is slowing triggered bullion buying and dampened demand for riskier assets such as equities.
Tensions between Ukraine and Russia are also weighing on appetite for risk globally on a growing chance of western sanctions over Crimea. The Group of Seven advanced economies will demand that Russia halt efforts to annex Ukraine's Crimea region in a statement to be issued on Wednesday. The market is awaiting the Fed's policy meeting on March 18-19. The U.S. central bank is most likely to announce another $10 billion cut to its monthly bond-buying stimulus, even after a series of U.S. economic data showing that growth has been hurt by harsh winter weather. Now investors remained cautious after data released over the weekend showed that Chinese exports fell 18.1% on a year-over-year basis in February, confounding expectations for a 6.8% increase, following a rise of 10.6% in January.
Technically market is under short covering as market has witnessed drop in open interest by -9.24% to settled at 10170 while prices up 874 rupee, now Silver is getting support at 46138 and below same could see a test of 45505 level, and resistance is now likely to be seen at 47187, a move above could see prices testing 47603.