IRAN: No Sign Of Protests Diminishing As Pres. Promises Price Gouging Crackdown

Spot silver has pierced the $60/oz handle, up almost 4% today and pushing year-to-date gains to an impressive 108%. We haven’t seen an obvious trigger for today’s rally, and are sceptical of arguments attributing the rise to rate cut expectations - Fed fund implied rates are up to 3bps higher on the session.

• Trend signals in silver unsurprisingly remain bullish. Our technical analyst notes that the next topside is $60.852, the 1.382 proj of the Oct 28 - Nov 13 - 21 price swing. Beyond this level, Fibonacci projections and round-numbers will be eyed from a technical perspective.
• A breakdown in the Gold/Silver ratio may have exacerbated recent outperformance in silver. The ratio has pierced the 70 figure, after previously breaching trendline support drawn from the 2021 low and the May 2024 low of 72.6.
• Daily ETF flows will have also supported upside in silver, with 30-day  rolling flows now back above the average since 2010 (in contrast to Gold).
• Other factors that have contributed to silver’s rally include tight physical supply, previously in London (the October spike) and more recently in Shanghai. Bloomberg reports that the annualised 1-month silver lease rate is still elevated at over 6%, above the 200-day moving average of just under 4%.

Figure 1: Gold and Silver ETF Flows

Figure 2: Gold/Silver Ratio Since 2020 (daily)

The questions that we have selected for Instant Answers for the December FOMC statement and Summary of Economic Projections (scheduled to be released at 1400ET Wednesday) are:

• Fed funds rate range maximum
• Number of dissenters
• Does the FOMC change its forward guidance to indicate a higher bar for additional cuts?
• Median dot for 2026
• Median dot for 2027
• Median dot for 2028 
• Median longer run dot 
• Interest rate paid on reserve balances
• Standing repo minimum bid rate

• EUR/USD: Dec11 $1.1595-00(E3.2bln), $1.1610(E3.6bln), $1.1800(E1.7bln); Dec12 $1.1550(E1.3bln); Dec15 $1.1600(E2.2bln)
• USD/JPY: Dec11 Y154.95-00($1.1bln), Y156.00($2.2bln); Dec12 Y155.00($1.0bln); Dec15 Y156.50($1.1bln)
• GBP/USD: Dec12 $1.3240-55(Gbp1.1bln)
• AUD/USD: Dec11 $0.6550(A$1.6bln)
• USD/CAD: Dec12 C$1.3780-00($1.6bln)