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On August 14th, Li Lecheng, Secretary of the Party Leadership Group and Minister of the Ministry of Industry and Information Technology, recently visited Qinghai, Gansu, and Ningxia to investigate the development of the salt lake industry and the green and low-carbon development of industry. In Golmud City, Qinghai Province, Li Lecheng visited Qinghai Salt Lake Magnesium Industry, Potash Fertilizer, and Lithium Battery Company to investigate the production of integrated salt lake magnesium, potash fertilizer, and lithium salt projects. He emphasized the need for a scientifically planned development strategy for the salt lake industry, strengthened policy support and resource guarantees, optimization and strengthening of enterprises, promotion of resource integration and industrial synergy, tackling key core technologies in salt lake resource development, improving the efficiency of potassium, lithium, and magnesium resource development and utilization, and the level of deep processing, and creating a distinctive and advantageous industrial chain.On August 14th, Oxford Economics stated that Japans plan to cut the food consumption tax will widen the fiscal deficit and push up Japanese government bond yields. Economist Norihiro Yamaguchi wrote in a report that model calculations show the tax cuts will reduce Japans annual tax revenue by approximately 5 trillion yen, a loss that will be difficult to offset through other means. The institution expects some of the tax revenue loss to be offset by non-tax revenue and spending cuts, but assumes half of that will be financed through debt. The institution predicts Japans primary fiscal deficit will worsen to 3% of GDP, subsequently improving gradually from 2029 onwards as the debt-to-GDP ratio rises and fiscal consolidation intensifies. Oxford Economics projects that by the end of 2026, the yield on long-term Japanese government bonds will rise to approximately 3%, rather than remaining around 2.8%. Although the current reaction in the bond market is relatively limited, Oxford Economics believes that as more policy details emerge, the market will begin to gradually factor in the impact of the tax cuts on the fiscal situation.August 14th - According to foreign media reports, economists are now worried that the persistent high temperatures and lack of rainfall will increasingly drag down British economic activity. Currently, about two-thirds of England has officially entered a drought state, and newly appointed Prime Minister Andy Burnham convened an emergency meeting this week to discuss government measures to deal with the drought and wildfires. Increasing signs indicate that extreme heat is driving consumers away from high streets, impacting agricultural production, hindering construction, and dragging down labor productivity. An analysis by an agency on Friday showed that, so far, the heatwave has caused approximately £6 billion in losses to the British economy, equivalent to 0.2% of economic output. An economist stated, "The hot summer has brought yet another negative supply shock to the British economy. While the impact of the heatwave on GDP levels may only be temporary, the risk is that this heatwave could again push up prices in some sectors, thus creating new challenges for the Bank of England, which is already dealing with high inflation."A NATO military spokesperson stated that, following confirmation, an Italian Typhoon fighter jet eliminated the potential threat over an uninhabited area (regarding the earlier drone incident in Latvia).A NATO military spokesperson confirmed that NATO allied warplanes were scrambled due to a drone entering Latvian airspace.

Silver Price Prediction: Despite higher rates and a stronger currency, silver prices will increase

Alina Haynes

Jun 02, 2022 16:25

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Despite an increase in the currency and rates, silver prices surged. Higher yields raise the opportunity cost of keeping gold and strengthen the currency, causing gold prices to decline.

 

Even with growing inflation, gold is unlikely to be a hedge if the Fed does not take the necessary steps to combat runaway inflation. The currency strengthened when rates increased.

 

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As investors continue to focus on Fed rate rises and intensifying pricing pressures, benchmark rates increase. The ten-year yield decreased by 8.2 basis points to reach 2.928%. Despite the EU prohibition on Russian oil and the lifting of limitations on the Shanghai shutdown, oil prices continued to rise.

 

The Job Openings and Labor Turnover Survey (JOLTS) data for April indicated 5,46 million job openings, a decrease of 455,000 from the previous month. Reduced the disparity between job vacancies and available workers.

 

Despite the narrowing of the difference, the result implies a tight labor market in which labor supply and demand are in equilibrium.

 

Today also saw the release of the ISM Manufacturing Index, which indicated that employers want to reduce the rate at which they hire new staff. The employment figure came in at 49.6, marking the first reading below 50 since November 2020. Relative to the labor supply, hiring will decrease.

 

These numbers are released two days before the May nonfarm payroll report. Economists anticipate an increase of 328,000 jobs from the previous month and a decline in the unemployment rate to 3.5%.

Technical Evaluation

Despite a bearish tendency, silver prices attempt to test the 10-day moving average near $21.9. As increasing inflation has become a greater concern for economists, the Fed intends to take whatever measures are necessary to curb inflation.

 

This circumstance will exert additional downward pressure on silver prices coming forward. The 50-day moving average continues below the 200-day moving average, representing a headwind for XAG/USD and indicating negative trend. Silver will likely reach the level of 20.4.

 

Resistance is seen around prior support at the 10-day moving average of 21.9. Support is seen close to the lows of the 13th of May near 20,4. As a result of the crossing purchase signal generated by the fast stochastic, short-term momentum turns positive.

 

The medium-term momentum turns positive when the histogram and MACD both show positive values (moving average convergence divergence). The MACD histogram is moving in negative area, indicating a downward trend in price movement.

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