Firming equities pressure silver price

By: Daniel Abd-Allah
Daniel Abd-Allah
Daniel has 14 years experience in markets and asset management, with a specialised focus on commodities such as oil,… read more.
on Jul 24, 2014

**Silver Price**, Thursday, June 24: Silver has been trading lower today amid rising equities but geopolitical tensions, healthy physical demand and a drop in total supply appear to be reining in further losses.
The Standard & Poor’s 500 index touched a record yesterday as earnings of companies including Facebook Inc. came in higher than estimated.
Silver futures for September delivery were down 14 cents an ounce, or 0.66 percent, to $20.85 as of 07:51 BST. Some technical analysts have identified silver’s immediate support levels as $20.55, $20.4 and $20.1. The white metal has gained nearly seven percent in the year-to-date after a three-year decline when it lost 50 percent, underperforming gold by 30 percent and the S&P 500 Index by 100 percent. For the week to July 22, holdings in silver-backed exchange-traded funds (ETFs) fell by 1.46 million ounces (moz) to 618.93 moz.

CPM Group estimates the global silver net surplus to drop to 86.9 moz this year from 105.3 moz in 2013.
“Building on an impressive 2013, investors continued to boost silver holdings in the first half of 2014. Silver exchange traded funds (ETF) backed by physical silver added 7.0 million ounces (Moz) of silver bullion through June; in contrast, gold ETF holdings dipped by 1.4 Moz ounces over the same time period. Globally, silver bullion coin sales are up 4.5 percent through the 1st quarter of 2014, according to precious metals consultancy Thomson Reuters GFMS. U.S. Mint sales of American Eagle Silver Bullion coins maintained near record level sales, totaling 24.1 Moz for the first six months of 2014, just shy of the 25.0 Moz sold in the first half of 2013, threatening to overtake the record sales of 42.7 million American Eagle coins acquired by investors last year. Other silver investment products, such as silver bar consumption, appear to be easing so far this year after a strong showing in 2013,” said the Silver Institute, an industry group, in a July 17 statement.

The statement went on to reveal that industrial demand for ethylene oxide production is expected to rise 23 percent in 2014 to 8.0 moz, according to Thomson Reuters GFMS. Metals Focus, a precious metals consultancy, estimates demand from the photovoltaic industry will climb by 10 percent this year. The Semiconductor Industry Association reported that semiconductor sales were up 8.8 percent in May from a year ago. Silver is used in electronic products that contain semiconductors.

Meanwhile geopolitical tensions are currently focused on Gaza and Ukraine. According to the United Nations Office for the Coordination of Humanitarian Affairs (OCHA), as of July 23, Israel’s operation Protective Edge had resulted in 518 civilian deaths among Palestinians, of whom 170 were children and 86 women; while three Israeli civilians had lost their lives. The number of injured Palestinian children stood at 1,213. The figure of displaced Palestinians rose to 140,000, who were hosted in 83 United Nations Relief and Works Agency (UNRWA) schools.

Yesterday, the UN Human Rights Council voted to authorise a commission to investigate alleged war crimes in Gaza. The US was the only “no” vote. From Jerusalem, the UN secretary general, Ban Ki-moon, called for “an end to the [Israeli] occupation and the daily humiliation and anger that comes with it.” He described the Israeli strikes on the Shejaiyah neighbourhood in Gaza as “atrocious.”
Pro-Russian separatists shot down two Ukrainian fighter jets over eastern Ukraine yesterday, according to the Ukrainian government.

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