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Silver outperforms gold in May, may hit Rs 53,000 in coming days

There is no doubt that the precious metals are shining amid the recent Covid-19 crisis but what’s interesting is silver outperformed gold in the month of May by rising nearly 20 per cent and topping the Rs 50,000-mark per kilogram.

Fear of global slowdown due to long lockdown in most of the countries due to the pandemic is supporting the white metal. Rising US-China tensions, weakness in the dollar index, and downbeat global economic data are also helping the silver prices rally. Latest data shows that the global economy will take time to recover from the pandemic.

Downbeat US personal spending and rise in personal income is also signalling that US citizens are more focused on saving rather than spending. US goods trade balance is also at a negative $69.7 billion, supporting safe-haven buying in precious metals. Tensions between the US and China and fear of global recession could continue to support silver prices in the coming days.

silver-chart

Technical view
Silver prices closed above Rs 50,000 per kilogram after September 2013 on the monthly chart, which shows long-term breakout in the commodity. Even in international markets, silver is near to breakout point of $18.55 per troy ounce at comex pision. International, as well as, domestic monthly price chart is clearly indicating breakout in the commodity.

At comex pision, once silver starts sustaining above $18.55 per troy ounce, it could extend the gains towards $19.50-20.40 per troy ounce in coming weeks. Silver will show weakness only when it gives close below $17.70 per troy ounce.

At MCX, silver gave long-term breakout on daily, weekly and monthly chart, indicating further upside in coming days. If it sustains above Rs 50,220 per kilogram, then it will extend the gains towards Rs 51,100-53,000 in coming days. Weakness is expected in this precious metal only if it closes below Rs 48,500 per kilogram but the chances of that happening are remote.

Silver is likely to show further strength in the coming days and traders can buy on dips around Rs 49,500 per kilogram with a strict stop loss below Rs 48,440 per kilogram on a closing basis for the upside target of Rs 51,100-53,000 per kilogram.

(Disclaimer: View in the above report is the author’s personal view and need not guarantee any kind of profits. Investor shall consult with their financial advisor before investing in commodities. Investments in commodity market are subject to market risk.)

Turning from Afghanistan, the US sets focus on China

After two decades of focus on Afghanistan, the United States’ withdrawal this week allows the country to shift its concentration to the east, where superpower rival China is now the number-one priority.

In an indication of Washington’s strategic turn, Vice President Kamala Harris was in Southeast Asia last week even as the US pullout from Afghanistan moved into its turbulent final days, hoping to strengthen US allies’ pushback against the region’s giant.

Harris accused Beijing of “actions that… threaten the rules-based international order,” particularly its aggressive claims of territory in the South China Sea.

Her tour of Singapore and Vietnam was seen as an effort by the administration of President Joe Biden to reassure Asian allies, who were left somewhat disquieted by the US pullout from Kabul after the sudden fall of the Afghan government that Washington had propped up for nearly 20 years.

Ryan Hass, a foreign policy specialist at the Brookings Institution, said the debacle of the US pullout from Afghanistan will not have a lasting impact on Washington’s credibility in Asia.

“America’s standing in Asia is a function of its shared interests with its partners in balancing China’s rise and in preserving the long peace that has underpinned the region’s rapid development,” Hass said.

“None of those factors are diminished by events in Afghanistan,” he said told AFP.

The US turn to East Asia will “open up new opportunities” for the US and its partners in the region, he told AFP.

Lawmaker Adam Smith, head of the Armed Forces Committee in the House of Representatives, said that the US exit from Afghanistan is not likely to change the balance between the United States and rival superpowers Russia and China.

He rejected suggestions Tuesday that the seeming momentary display of weakness by the Americans could encourage China to invade Taiwan or Russia to attack Ukraine, for example.

“I think anyone who thinks that their [Russia’s or China’s] calculation has significantly changed because we just pulled the last 2,500 troops out of Afghanistan — I really don’t see that,” Smith said during an online Brookings conference.

“There are a lot of other issues that go into whether or not Russia and China are going to feel like they have the ability to be aggressive in those parts of the world,” he said.

Derek Grossman, a former Pentagon official and now a defense expert at the Rand Corporation think tank, said China could seek advantage in fostering good relations with the Taliban, the militant Islamist group US forces fought for 20 years before they again seized power in Afghanistan August 15.

Beijing could decide quickly to recognize the Taliban government, even as Washington and other Western governments hold off as they hope to convince Afghanistan’s new rulers to moderate their hardline policies.

“China, as a new great power in competition with the United States, probably wants to demonstrate its unique way of handling world events, which tends to be — often reflexively — the opposite of Washington’s approach,” Grossman said.

“Recognizing Taliban-run Afghanistan would contribute to the perception that it is Beijing, and no longer Washington, that is now setting the agenda and shaping the future regional order,” he said.

In Video: Taliban in Afghanistan: As US departs battlefield Kabul in haste, what lies ahead now