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Spot silver slipped this week after nearly reaching one year high as investors were cautious awaiting for signals from top central banks, mainly the U.S. Federal Reserve, on their monetary policy plans.

Global Economy

• Major global equity gauges were on positive terrain except European peers that displayed mixed signals.

• U.S. GDP rose at a 1.1% annualized pace in the first quarter of 2023. U.S. economic growth slowed considerably during the first three months of the year as interest rate increases and inflation took hold of an economy largely expected to decelerate even further ahead.

• Euro Zone GDP in the euro zone expanded by 0.1% in the first quarter. The euro zone grew only marginally in the first three months of 2023 and at a rate lower than market expectations after stagnation at the end of last year.

• U.S. First Republic Bank was taken over by the Federal Deposit Insurance Corp. due to a flood of customer withdrawals and declining asset prices signalling that the banking crisis in U.S. still exists.

Currencies

• U.S. dollar index eased 0.16 percent last week and settled at 101.65 mark.

• Euro gained around 0.30 percent last week against the USD. Japanese Yen shed 1.56 percent while Chinese Yuan shed 0.27 percent against the greenback.

• Indian Rupee shed 0.38 percent and settled at 81.72 against dollar last week.

Silver

• Silver prices in LBMA and COMEX settled near USD 25 per troy ounces last week.

• In MCX , front month Silver futures shed 0.78 percent last week.

Spot Silver eased from near yearly highs this week

Silver prices experienced a slight decline this week after nearly reaching a yearly high on Monday. Market participants were cautious and waiting for signals from top central banks, especially the U.S. Federal Reserve, regarding their monetary policy plans. The Federal Reserve, which is expected to raise interest rates by 25 basis points, will begin the policy meet today. The central bank will take into consideration the weaker-than-expected GDP growth in Q1 of 2023, whereas the prevailing inflation pressures in the U.S. support another rate hike. Additionally, the European Central Bank is expected to raise its rates for the seventh consecutive meeting on Thursday.

Industrial offtake of silver is expected to increase by 2.6% YoY to 550 million ounces in 2023 due to vehicle electrification, green infrastructure commitments, and end of zero COVID in China. Photovoltaic silver offtake is set to reach a new high due to the acceleration of renewables deployment in the Russia-Ukraine war. Jewelry demand is forecast to decline by 10% driven by India, while the rest of the world should see a modest rise. Silver physical investment is expected to drop by 16% from 2022's record high but would still be the thirdhighest total on record. Global silver demand is forecast to dip to 1.15 billion ounces, still the second-highest on record. Silver supply is expected to increase by 4% in 2023, reaching a new high of 1.055 billion ounces, mainly due to higher mine output. Silver mine production is predicted to rise by 5%, primarily driven by new silver mines in Mexico and increased by-product output from Chile. Peru's civil unrest could lead to a reduction in production. Silver recycling is anticipated to grow by 3%, mainly due to higher industrial recycling. Although the deficit in the silver market is expected to decline this year, it is still projected to be high at 119 million ounces.

iShare Silver ETFs holdings increased in April

Total physical holdings of Silver backed ETFs with iShare silver trust increased by 1.78 percent in April following a 3.87 percent outflows in March. The Inflows were 0.23 percent in February and 1.91 percent inflows in January. The total physical holdings in silver with iShare silver trust is more than 468 million troy ounces at the end of April.

COMEX Money Managers increased net longs in Silver F&O

Data from U.S. Commodity Futures Trading Commission (CFTC) showed that the hedge funds and money managers added bullish positions and the bearish positions in COMEX silver Futures and Options contracts in the week ended April 28. The net long positions has increased.

Gold - Silver Ratio at 80.20 ounces

Gold/Silver Ratio is the amount of silver it takes to purchase one ounce of gold. One ounce of gold was at 80.20 ounces of silver on Friday.

Outlook

In the near term, silver prices are expected to stay strong due to the anticipated increase in demand in 2023. China has taken several steps to restore China's economy to a growth path in 2023. The resumption of industrial activities in China expected to fuel the demand for silver. Furthermore, the concerns about banking sector instability and the resulting risk-off sentiments have provided a foundation for silver as a precious metal. Prices are mainly checked by a stronger dollar on the prospects of hawkish moves from Fed.

LBMA Spot:

Sustained trades above USD 24/oz region, major weakness in prices may be ruled out.

MCX:

As long as trades remain above the 73000 region, prices may stay firm. Conversely, a significant drop below the same region could trigger weakness.

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